Whilst contributions cannot be derived from your state pension it can be taken into account when assessing your expenditure and therefore your disposable income.

In other words, If you were earning through employment and in receipt of your state pension then the total income would be reviewed against your expenditure.

A couple of scenarios to hopefully clear up what I mean above:

In the event you had a small part time job earning say £100pcm and the rest of your income was derived from social security benefits and a state pension, again the total income would be used to assess your position but any payment required to be made by you would be limited to £100 as payments cannot be taken from benefits/state pension.

If your sole income is benefits/pension then no contribution should be requested.

Hi SunnyM.

To add to Voice of Reason's comments, do you expect to continue working after you become entitled to collect your state pension?

Hi, yes I need to work after I get my State pension since my TD only started in September of 2016 which will take me up to 2020. I am due to receive my State pension at end of 2018. I work full time.

Hi SunnyM,

It’s good to see you are thinking ahead to the future and planning for things.

As VOR has explained the maximum payment that can be taken from you is the amount which you receive from private income.

At the point which your receive an increase in overall income then you will want to contact your Trustee and complete a new income and expenditure statement to see what you may be able to increase your payment by. It could be the case that instead of working full time, you could reduce your working hours as your state pension would then make up the difference. In a scenario like this it then could be possible to keep your payments to the Trust Deed the same but you feel the benefit of not having to work full time.

Speaking things over with your Trustee is the best thing to do.

Hi David, thanks for responding. Quite depressing actually that my state pension gets taken into account. I know I can defer taking my pension...would this be classed as illegal? I may fall down a day but I really wanted to save my pension as it's all I will have on retirement.

Hi SunnyM.

The principle of a trust deed is that you pay back what you can reasonably afford, and in return the creditors write off what cannot be repaid.

If your income increases without an equal increase in expenses it seems entirely reasonable that you contribute more.

I'd suggest speaking with your trustee about any plans to defer taking the state pension in advance of doing so. That way everything is out in the open and everyone can be fully informed about where they stand.

I don't think that we're talking about breaking the law here, but there's still perhaps a conversation to be had.

Hi SunnyM,

You may only have to increase your payments to the Trust Deed for 12-18 months depending on how long you have between receiving your state pension and the overall increase in your income and the completion of your Trust Deed.

Like TDA has advised a sensible discussion needs to take place between you and your Trustee about all of this.

It's an interesting question you raise, SunnyM.

Your trustee couldn't force you to start receiving your state pension. However, maybe they could argue that by deferring it you are breaching the terms of your Trust Deed and you could risk it being terminated for lack of compliance.

Was the state pension something that you remember being discussed at the time you signed the Trust Deed?

Apologies for the lateness of my response Kevin. No, this was never discussed. I think I may just wait this out until the time when I am able to claim it and then speak to the Trustee.

Hi David....I know I may have to increase my payments but I am worried they would ask for the whole of my pension and my other half would be wondering where the money is going.

Hi SunnyM,

It could be the case that come the point whereby you receive your state pension your expenditure has changed and actually your payment to the Trust Deed doesn’t change. You could also consider reducing your working hours which again could mean that you can’t afford to increase your payments.

The best thing to do is speak with your Trustee. They know your full financial situation and can give you an idea of what might happen as there are a couple of options/scenarios and we don’t know what your situation will be like in 2019-20.