If you enter a trust deed, private pension income has no special status. It’s treated the same as money earned from work.
It will get factored into your trust deed payment. This payment gets based upon how much you can afford.
State pension income has no special status. If you’re in a trust deed, this money gets treated as income.
You may begin to receive your state pension while still working. If your overall income increases, you may have to pay more towards your debts.
Trust deeds cannot get funded by the state pension alone. They can only get funded by non-benefit income. If a state pension is your only income, you cannot pay into a trust deed.
Lump sums from pensions get treated as income. This money has no special status in a Scottish trust deed.
Your trustee has an interest in received pension lump sums. The money can get used to repay your creditors.
Money kept within an approved pension fund should be safe. This is not an asset that your trustee can usually access.
This changes if you take this money out of the pension fund. Your trustee will treat it as income. The money is likely to get used to repay your debts.
You can retire during your trust deed. For the plan to succeed, you must still make an agreed regular payment.
If you’re nearing retirement, think carefully about your plans. Can you keep paying if your income reduces?
A pension lump sum could get used to clear your debts. This might involve repaying them in full. It might involve agreeing reduced settlements.
If this gets done informally, you might avoid personal insolvency. A trust deed is a type of personal insolvency. Savings might be made. You could be debt free sooner.
A trust deed could get funded by a single pension lump sum. This is complex and will not be available to everyone.
Your trust deed could get ended early using a pension lump sum. The debt, interest, and costs must get fully repaid. This could be expensive.
Take advice before using pension funds to settle debts. They’re usually a protected asset in insolvency. You will rely upon this money to fund your retirement.
Retirement and pensions are complex issues. If you’re struggling with debt, they become more complex.
Before accessing a private pension fund, speak to a regulated pension adviser.
For expert debt advice, contact us.