Pension Payments in an IVA

Max_Maxwell

I'm in a position whereby I'm able to start a pension, something I couldn't afford to do at the start of my IVA. Is there a limit on the size of pension contributions I can make when in an IVA, other than the statutory pension-related contribution allowances?

I changed jobs 6 months ago and my increased salary means I have surplus income available. My annual review is due in September.

Many thanks

FoggyBrain_2

Hi. Unless you can fund the new pension payments from your allowances ( or the 50% of your salary increase you are allowed to keep) the creditors will not allow these payments as an allowance.

Max_Maxwell

Hi Foggy, thank you for replying. If I'd had a pension plan in place at the start of my IVA, I understand I would have been permitted to keep it running. Is that correct? Now, let's say my net salary has increased by £100 per month. My intention was to put 50% of that into a pension leaving £50, of which my creditors are entitled to 50%, thus £25. I presume that's not permitted?

Does that mean that those in our position are given no opportunity to make retirement provision?

joesaunt

Hi

In my IVA agreement my creditors said I could start a pension as I hadn't got one as long as I only paid the minimum contribution. I am now fortunate enough to be having a small payrise at the end of August and my IP has said that they will need to do a new income and expenditure then and they will reassess it AFTER the pension contributions come out.

It may be worth a quick phone call to them.

FoggyBrain_2

Max -- if your income increased by £100 pm net, 50% of THAT would be due to the creditors, and you can pay the other (your) 50% into a pension if you wish. They MIGHT agree to doing it your way ( but are entitled not to). Yes, generally pensions already in place can remain and are allowed in expenses, however, payments would have to be reduced to the minimum.

The creditors take the view that you are entitled to make a pension provision -- but not on their time! 5 years out can be caught up later (maybe using those unused IVA payments once the thing has finishe! ).

Max_Maxwell

Thanks Foggy and JoesAunt for your input, very helpful.

I'm going to take out a flexible pension plan at a rate I can comfortably afford now and if my creditors insist on a reduction later then so be it.

I appreciate that there must be sensibilities attached to how much one can invest in a pension compared with that due to the creditor, but I hope they may show understanding as they're receipts will still be more than they were before.