IVAs and pensions

23 August 2016

Entering into any kind of debt solution can be quite daunting and the Individual Voluntary Arrangement (IVA) is no exception.

From queries about eligibility and how long it lasts to worries about how being in an arrangement will affect a partner, we are always on hand to help address any concerns.

But one of the most common queries we often come across is what will happen if you reach pensionable age during an IVA.

Although a person’s state pension won’t be affected by entering into an IVA, their personal pension payments may be.

We spoke to our Insolvency Practitioner Nick Payne to find out more, who said:

“If a client wants to draw down a pension lump sum to offer creditors in an IVA, whether that is a pure full and final IVA or a lump sum followed by monthly contributions, then they are able to do so.

“However the Supervisor/IP cannot force a client to draw down a pension to pay creditors.

“During an IVA, if a client actually receives a pension lump sum or monthly income from a pension, then we apply the annual review clause.  This states that the client should increase their monthly contribution into the IVA by 50 percent of any increase in their surplus as shown on their Income and Expenditure.”

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