F&F Advice / Pension

[nervousperson]

Hi,

Recevied a pension statement from a former employer the other day, and was surprised as to how much was in the fund. Not a huge amount, but not insignificant.

Now I realise that I can't access these funds under normal circumstances, but is it possible to sign over a pension fund as part of a F&F payment, or is the fund untouchable?

[Shining]

Hi there, I'm not sure of the answer to this but will bump it up for a professional opinion. I would personally leave it as I think it could be much needed in your retirement.

[nervousperson]

Not enough in there to make a difference. I can relatively easily restore the pension fund over the course of 2/3 years on top of what I would normally pay in (can't pay in anything at the moment as entry to my new employers' scheme was blocked by the terms of the IVA)

[Michael Peoples]

If you are old enough to draw down some of the funds creditors may accept this as a full and final settlement. However, be very careful about affecting your position in retirement and it may be worth seeking independant financial advice.

[nervousperson]

Nope - not old enough to draw down funds (only in my 30s so more than a few years to go yet)

Does this mean I can't sign the fund over?

I'm basically worried that my equity in my equity release clause won't be enough to satisfy the final value demanded as the house has gone down by about 40k....which would mean I could only pull about 5k of equity on an 85% remortgage...leaving me about £20k short

Replenishing the fund isn't my problem as my employer would match my contributions. As I can't pay anything in now, I believe it would only take about the same amount of time to replenish it as it would to pay off the IVA.

[Michael Peoples]

Many people are in the same boat as you and the IVAs are normally extended by twelve months in lieu of the unobtainable equity. This would be a much better option than affecting your retirement income which you cannot touch anyway.

[nervousperson]

I understand all the bits about planning for the future etc etc (see above - I can replenish the fund without issue as the IVA prevents me saving anyhow which IMO makes this irrelevant)

Going back to my underlying question - are you saying I *can't* legally sign the fund over as part of the IVA agreement?

[Michael Peoples]

I do not see how it could be taken by the IP since only 25% can be drawn down as cash once you reach 55. Your creditors would not wait this long and your IP would not want to keep the file open for another 20 plus years.

[nervousperson]

OK...so a £10k fund can't be signed over as a £10k asset...?

[MelanieGiles]

An IVA is all about cash rather than assets - so there is no way that your creditors would agree to this suggestion if the money could not be released for 20 years+

[nervousperson]

Michael, Melanie - many thanks; I think you've indirectly answered the question bubbling in my head.

Summary :
If you are of the age where you can draw a lump sum from your pension fund, this can be paid into the IVA, perhaps as a F&F, perhaps as part of the agreement.

If you are of an age to draw a monthly pension, this will be classed as income and treated as additional income.

Otherwise, a pension is legally untouchable and should be treated as sacrosant.

Correct?

[MelanieGiles]

Correct!

[nervousperson]

We got there in the end - many thanks to the both of you...just wish this place had been here before I entered my IVA...

[nervousperson]

PS It's a pity as I could have signed it over and probably met my target settlement without issue...the recent housing dip means I don't have enough equity in the house if I remortgage at 85% to reach the %age required - 35k equity release has been reduced to about 5k.

As I have a clause that says if I don't meet the 66% then declare me bankrupt, I'm a little worried...guess I need to try and speak to my factory IP sooner rather than later...

[MelanieGiles]

Sounds like a plan! But I am still not sure what you mean about signing your pension over? This would not have produced any cash.