Pension and IVA

spence1412

Hi
When I hit 55 I had to cash in 25% of my pension to pay to the IVA company and the other 75% had to be used to buy an annuity which I now have for life. If I could have been able to access the whole of my pension pot I could have paid off my IVA and started saving for my pension again. Now, 18 months down the line I could have done just that, but too late! I missed the deadline!
The only winner in this is of course the pension company.
I have estimated that if I had my pension pot, put it under the bed, taken out a monthly sum,and then paid tax on it, it would have taken 22 years to get back the amount I paid in! I ain`t gonna live that long!!!
I am not the only person in this position, a retrospective arrangement with the pension providers could have been made.
The IVA arrangement companies are not without fault here either.

longtermplanner

To be fair to your IVA company, they could not have predicted that the pension rules were going to be changed so dramatically.

It was your decision to enter the IVA, presumably you thought at the time it was a good arrangement.

Retrospective unwinding of annuities is never going to be possible. It is not the pension compay's fault you now wish you had done something else.

Tryingsohardtofloat

The laws and rules surrounding pensions are complex, and annuities that have already been taken according to the Rules at the time they were taken, cannot be amended. Its really not simple, each type of pension product is bound by its own rules & there are different legalities according to which pension rules that fall under, for example a personal pension is different from a stakeholder with a capped annual charge that is different from a money purchase pension that is different to a final salary pension that is different to a pension that falls under Occupational Rules. Each new law has been protecting policyholders from the bad old days where your employer could steal all of your contributions to the black holes in the scheme not so long ago. Pensions laws are designed to protect your pension pot & stop people being able to siphon it off. But these laws won't generally work for everybody in every situation particularly when the pension rules change so abruptly & so much. And they end up being so utterly complicated that its a question of you making the best decision with the facts available to you at the time. I sympathise with your predicament but an annuity cannot be redone. I also think that not being able to amend an existing annuity is ridiculous as well but there we are.

Its not up to the pension providers to decide when & where individuals can take their benefits, there are laws in place that firmly outline when benefits can be taken, as obviously a pension company is run for profit & will not run for the benefit of its policyholders so they are unlikely to vote for revisions if it means they will lose a fair chunk of profit.

A pension is a financial planning product that allows you to receive an income from a specified age until you die. This is what you purchased the product for & this is what you received.

re5

I sympathise, I entered into an iva last year with debts of about £35k I declared a pension I was receiving at the time as part of my income. My ip asked me if I had any others but I could not lay my hands on the details and they said ok don't worry about it.

Subsequently, I did trace it and was pleasantly surprised to find I had about £45k in the pot so I'm drawing off 25% of it tax free and leaving the rest there, as I understand it from next April I could draw the rest of it out.

I did think about telling my ip about this but I'm not as I recently had my annual review and so they won't know about it being transferred into my account soon.

I don't feel bad about this because I, for years, have been royally screwed by my creditors - credit card companies basically charging me usurious rates of interest, making a bad situation worse all the time. If they thought about charging reasonable rates of interest I might well have been able to pay them back - they can afford 0% rates to new customers but hike up the rates for existing customers to pay for it. Then again what about their criminal behaviour in recent years fixing rates in cartels for example. In my book any way I can screw them back is good in my book, so unfortunately they won't be getting a sniff of my pension

jamesd

spence1412 wrote: »

When I hit 55 I had to cash in 25% of my pension to pay to the IVA company and the other 75% had to be used to buy an annuity

Why did you have to buy an annuity? It's been possible to get the lump sum and not buy an annuity since April 2006 when alternatively secured pensions were introduced.

At the time you did it, capped income drawdown was available and could have been used to take an income from investments within the pension. The permitted income would have been higher than you could have got from an annuity.

So I wonder who told you that you had to buy an annuity rather than use another option? I assume that the IVA would have been taken to suggest a lack of financial understanding but even so age 55 is pretty young to be buying an annuity.

longtermplanner

re5 wrote: »

Subsequently, I did trace it and was pleasantly surprised to find I had about £45k in the pot so I'm drawing off 25% of it tax free and leaving the rest there, as I understand it from next April I could draw the rest of it out.

I did think about telling my ip about this but I'm not as I recently had my annual review and so they won't know about it being transferred into my account soon.

A lot of alarm bells are ringing here.

If you want your IVA to carry on as though this 45k pension pot doesn't exist, then I suggest that you do not withdraw ANY money from it until your IVA ends.