Should I use my pension to pay a bill?

Helen, 33, is a part-time working mother. She has one child in school and one child in nursery. She's currently renting with her partner but hopes to buy a home within the next five years. Helen is thinking about pausing her pension contributions to free up some spare money. Her budget is squeezed and the extra money could make it easier to cover some everyday costs.

What Helen should consider:

• Her pension contributions are matched by her employer. She also receives tax relief on the amount she pays into her pension. If she stopped contributing, she wouldn't receive these additional benefits. Is the money she saves worth more to her now, and would this offset the additional money she could be receiving into her pension to benefit her future?
• She could lose out on investment growth. Her contributions are invested in pension funds, with the aim of making her savings grow in value. Pension funds invest in assets like company shares, and benefit from being invested over the long term. The longer her contributions are invested for, the more chance there is that they'll rise in value - although this isn't guaranteed.
• Could she reduce her contributions, rather than stopping them altogether?  

Mo, 56, owns his home with a small amount left to pay on the mortgage. He has a small pension pot of £9,000 and can claim a defined benefit pension at age 65. He'll receive his basic State Pension at 67.

He's feeling the pinch of increased costs of getting to work and doesn’t have much money left at the end of the month. Statements show his pension pot will provide a very small income in retirement. Could it be more useful now to cash it in?

What Mo should consider:

• Does he need to take it all or could he leave some invested?

• Does he have any other savings or financial products that could help him?

• Could taking the money affect the income tax he pays or limit the amount he can pay into a pension in the future?

• What will he do with it once he’s cashed it in? Will he need it all at once or does he need it to attract interest and/or investment growth?

• How long will the money last him? And what are his plans if his finances continue to be squeezed?

• Could cashing in his pension pot change his entitlement to or reduce the amount of any means-tested state benefits that he might receive?

• How will he manage financially when he stops working?

Annika, 60, has reduced her working hours to spend time with her grandchildren. She has a pension pot of £160,000 and plans to retire at 65. She'll receive the basic State Pension when she reaches 67.

She's thinking about accessing her 25% tax-free cash lump sum sooner than she planned to cover some unexpected bills and pay off the rest of her mortgage. 

What Annika should consider:

• Does she need her full tax-free lump sum in one go? If she plans on putting some of the money into savings, inflation could erode the money. She could consider short, medium and long-term savings and investment vehicles - including leaving it where it is
• How and when will she access the rest of her pension pot? Some options may limit the amount that can be paid into a pension in the future 
• A combination of retirement options might better suit her needs. Annika doesn't have to take all her tax-free cash at once. Some options will provide a more gradual way to access her pension savings