I AM IN A IVA AND SERVING WITH THE ARMED FORCES IN ABOUT 22 MONTHS FOR 22 YEARS SERVICE I WILL GET A LUMP SUM GRATUITY PAYMENT OF ABOUT 28K AND ABOUT 400 PER MONTH AFTER UNTIL I DIE. WHICH IS THE ARMED FORCES PENSION.
IS THIS PAYMENT CLASSED AS A WINDFALL AND THE MONTHLY PAYMENTS I WOULD GET THEREAFTER WOULD I BE REQUIRED TO PAY 50% OF THIS INTO THE IVA.
OR BY THIS TIME THE IVA WOULD HAVE BEEN GOING FOR 36 MONTHS AM I RIGHT TO ASSUME I CAN NEGOTIATE A PAYMENT TO CLEAR THE DEBT ERALY
Hi
I fear that this may be classed as a windfall,your pension will form part of your income so your IVA payments may increase if your overall income increases.
Regards
I am very suprised that this was not discussed with you at the start of your IVA. I always exempt resettlement payments for HMF personnel from windfall payments in my proposals, as that money is needed for you to find housing and to start a new career. If this has not happened in your own proposal, you will need to get your IP to call a meeting of creditors to discuss the payment, at which time you will need to explain what the money is for and what you need to spend it on - for instance a deposit for a house/rental deposit, the purchase of furniture if you have been living in married quarters, and the cost of studying for a new career.
If you are married, I was also apply the formula used in marital dispute settlements - ie that your wife is entitled to a share of the gratuity, based upon the number of years you have been married.
Other than that, if this has not been exempted, I am afraid that the money will be treated as a windfall and you will have to hand the money over to the extent of what is needed to clear your debts.
Could you possibly ETR until after the end of the IVA, to avoid receiving the money until a later time?
Unfortunately I fear that Andy is right. Your terminal grant is a windfall and the pension you receive thereafter is simply classed as additional regular income. The 50% rule would thereafter not apply and all the pension would be payable into the IVA.
You cannot reduce the lump sum and 'add it to your pension', even if you could it would constitute making an 'additional voluntary contribution' and I dont think your IP would like that. At best he would see, and you should have declared, that this money would become available to you during the IVA at the start of it if you have not already done so.
Im not sure but it may be possible to keep the money if you are unemployed since you will need it to live on (normally you cannot get state benefit assistance until it has gone) - Melanie will advise on this point.
I assume that this 28K is 28k before commuting your pension. In this case if you decide to commute you are looking at an additional lump sum on top of the 28k of max 50% of pension. I suspect this is also a treated as a windfall and you will also have to pay this into your IVA. If you commute you will have to remember that this will reduce your forecasted pension somewhat.
Depending on how much you owe, how much of it you will have to pay into the IVA or settle it, versus how much longer you have left to go and how much commuting will reduce your pension by, will depend on wether commuting your pension is a sensible thing to do, you will have to weigh the pros and cons up very carefully.
Last edited by greedfighter on Sun Oct 12, 2008 11:39 am, edited 1 time in total.
Melanie was obviously replying to this topic at the same time as me -but posted first - she beat me again (I will have to get up earlier or type faster).
You could try asking for an extension of service or you could ask for a short term FTRS contract to cover you until the IVA has finished - you wouldnt be due or receive the money until after the IVA has finished if that was the case - presumably you wouldnt be breaking any rules. Im sure Melanie will advise if you are !.
Last edited by greedfighter on Sun Oct 12, 2008 11:05 am, edited 1 time in total.
Yes delay receipt if possible until after the IVA was completed seems to be the best option.
However what divi is currently expected in your IVA?
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Thanks everyone some interesting info here, I have just checked my proposal it doesn't say anything about the HMF Pension, therefore I will check with my supervisor to confirm if this has been exempt.
I do remember speaking with my IP reference this last year I am sure he said it would be classed as a windfall but would only have to pay a % of this.
But alarmingly there is nothing in black and white to say this.
Unfortunately, I cannot extend service until the IVA has finished this was already asked for and declined, one option I have is to leave early where I would get the half pension which is just a lump sume of about 10k and then I would get the monthly payments and another lump sum when I am 60, by this time the IVA would have expired.
I suggest that you take some pensions advice from a company used to dealing with HF personnel. This is a lot of money to be gambling with, and ought to have been available to fund your future housing costs and career.
Thanks Melanie agree it is lot of money but equally I don't really want to work the next 22 mths to have to hand it over. Would you suggest an independant financial advisor or a solicitors that deal with HM Forces
Yes - 39p in the £ to creditors is a reasonable dividend. Definately try and delay the receipt of the lump sum and Pension.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Mel raises an interesting point which I missed the first time round about the interests of your wife. I have just checked my application form for terminal grant and pension(I am ex forces) and it allows me to nominate a person 'other than myself' to receive a share of the terminal grant and pension. The form is usually completed in the Personnel Office at the time you do your discharge routine.
From the comment about take some now and a lump sum at 60 it sounds like you 'opted in' to the new pension scheme when it came out, I know a 'little bit' about the old scheme but absolutely nothing about the new one but as Mel as suggested you may be able 'assign' some of the money to give half to your wife.
This is certainly worth looking into further strictly as Mel says 'with someone who knows about the AFPS'.
I would suggest pointing you in the direction of the Royal British Legion who can point you to an Independant Financial Advisor in your area with expertise in Service Pensions - these services are usually free(check first). It will also be worth checking with your Resettlement Officer as invariably as part of your resettlement course a free appointment with a service approved IFA can be arranged.
I wouldnt start shelling out money for a solicitor.
I would also apply to Kentigern House for your grant and pension forecast beforehand if you have not already done so before this appointment.
Last edited by greedfighter on Mon Oct 13, 2008 8:25 am, edited 1 time in total.
Hi Greedfighter that is correct I did Opt for the new pension scheme, some people say it was a mistake but personally when I weighed up the Pro and Cons the new scheme gave me the option to take my Early Departure Point (EDP) payment and I felt there wasn't much difference between AFPS 75 and AFPS 05 actual lump payment.
Although the monthly premiums were slightly higher in AFPS 75, I know the form you are talking about but believe this is only applicable to claim your pension at 60 or 55 if on the old scheme. For completion of 22 years service I believe this will go direct to me and will not get the option unless of course I die which my wife would recieve this automatically.
But thanks for the advice I will msot certainly look into this further.
