That's a great question, Buz.

Generally speaking, pensions can't be touched by a trustee in an insolvency. However, having said that, there was a case down South not too long ago where someone was forced to take a lump sum that was available to him. If this was to become the norm then the implications of the change in the law would be pretty severe...

Hi Buz.
I was discharged from td about six weeks ago, and was on here many a time over the previous few months asking advice about my pension lump sum. The advice from just about everyone especially the experts, as well as my own practitioner was to leave well alone until the td was finished and I had been discharged which turned out to be just a week later !
So that being the case I am now in the process of possibly taking early retirement and at least some of the monthly pension and the lump sum that goes along with it. Without of course, the worry of having some or all of it confiscated as it may have been while I was in the td.
So my advice is the same as everybody else. Err on the side of caution and leave it be til you are discharged then you can do what you want with it !

For some people this may present an opportunity to avoid personal insolvency altogether.

Debt advisers will need to start taking this into account when analysing the options that a client has.

Indeed - but potentially only at a considerable cost to their retirement income. If those funds are safeguarded in a pension pot then I imagine a lot of people would prefer to leave them there and consider their personal insolvency options instead.

I agree Kevin. It's all about helping to provide people with informed choice as always.

It might also become a way for people to tackle equity in their homes if they have entered a trust deed?

Hi TDA. You are correct as this is now a question which needs to be discussed at initial meetings where there is the likelihood that the individual may be in the position to withdraw a sum sufficient to clear or make a dent in the total debt figure.

It a bit similar to potential PPI payments, although the pension payments are far easier to predict/calculate.

Mark

Thanks for replies, my main concern was people not having a choice in leaving it be, as the rules now allow you access to the whole of your money purchase pension (which is in effect an asset) from 55. As I understand it this does not apply to final salary schemes (ie most public sector arrangements) but it does apply to personal pensions, of which many people will have pots accumulating and available.

Of course we would all choose not to access our pensions and pay off our debts, but if this is a monetary asset (more liquid than a property you could argue!) my main query was can you legally be FORCED to access it and distribute money to debtors ? I read somewhere that the amount of debt arising in the over 50's is exploding so this will affect more and more people. If you can access to pay off your mortgage then why not your other debts which are within a PTD ? Mark, you seem to infer in your reply that this is something that may be a reality/issue moving forward?

So..... are monies within a personal pension ringfenced from PTDs under the new rules ,even if the debtor passes age 55 and "chooses" not to take any cash or income from it? i.e. can they in fact now be forced to access the pension to pay off their debts?

If so it would of course be an idea to have your PTD completed prior to 55 methinks.... [;)]

Cheers!!

Hi Buz.

There's no sense that I'm aware of that compulsion in this area is likely, albeit Kevin has highlighted a worrying exception.

Perhaps it's more that it opens another route for people to avoid insolvency in the first instance, albeit perhaps at a significant cost later.

I think that's what Mark meant. Hopefully he will clarify that soon.

As advisers it's important to put people in a position to make informed choices. Using pension funds to repay debts will become a choice for more people. I bet a lot of people will do exactly that.

I asked about this as it would have helped me finish off trust deed with equity paid off/not a final salary scheme however you cannot access your works pension if you are still employed by your current employer.
also if you to access it after leaving the company the money left does not increase it will stay the same till you reach retirement age
if you did pass away before then your spouse would be liable for the tax on it as it will now not be a tax free sum.as for forcing you to give it to trustee that cannot happen unless you left the company your pension was being paid from

It's a complicated area Maverick hence why I was interested in comments thanks for your post. Many "works" pensions will have rules attached to them especially if they are final salary related. Most public sector pensions will be as I understand it excluded from the new rules. ....to the extent that they possibly will not allow you to transfer out into a personal pension and take advantage of the flexibility! This still has to be clarified along with other points. However if you have a personal pension then you will be able to access 100% of your fund as cash - 25% tax free and the rest taxed at your marginal tax rate from the age of 55, this is a fact as per recent budget. Many people will have these pensions some of which will be company pensions. So when you leave the company and reach 55 you can in effect access all your fund as cash.

It may not be the right thing to do this with regards to your longer term retirement plans but I am sure most creditors would not give a hoot and, rightly or wrongly in our eyes, expect a share....just like they expect a share of equity in a property.

My worry is many debtors approaching 55 will not realise the risk to their pension which is why I have asked for clarification in my original post.

Further info on this if it's available is needed!

Cheers

P.s. you can take your pension and cash from a personal pension even if your still working after age 55!!

personel pension poss works pension no

quote:

---

Originally posted by maverick267

personel pension poss works pension no,as work will still be contributing to it be very careful of this route as it seems only a quick fix an wary of the taxman taking rest of your pot as usual the robber

---