pension and insurance allowable expenses?

doomandgloom

Hello again

Not currently doing either of these, but am I allowed to pay into an occupational pension and am i allowed to have life insurance prior to discharge? And would these be deemed to be allowable expenses?

Is it better to wait until discharge? Not sure if OR has any interest in these sort of things.

Thanks

National_Debtline

Hi d & g


Take a look at the following excerpts from the Insolvency Technical Manual, which serves as guidance to Official Receivers (ORs). The OR would have some degree of discretion in individual cases, but the general wording does suggest that it may be wisest to defer any such payments until after one's discharge from bankruptcy.


31.7.118 Life assurance expenditure
Where the bankrupt has listed payments for a life insurance/assurance policy this is likely to constitute an asset of the estate which can be realised on behalf of creditors. The exact nature of the policy should be established and any policy documentation examined to establish whether there has been any assignment of the policy and whether there is a realisable asset available for creditors. If a bankrupt continues to make payments in respect of a policy taken out before the bankruptcy order, of which the bankrupt is the beneficiary, the whole benefit will be claimable by the trustee when it is paid out. The official receiver should inform the bankrupt of the consequences of continuing to pay premiums into a policy which vests in the trustee.




31.7.109 Contributions to a pension or SAYE scheme
The official receiver should examine closely any deductions at source from earnings and consider whether payments or over payments into a pension scheme should be disallowed, as this is not an essential outgoing required to meet the reasonable needs of the bankrupt. In most cases an individual can elect to stop or reduce their contributions to a personal pension for a period of time. Whilst the bankrupt may argue this will have the effect of reducing future income, the official receiver should explain that the cost of maintaining his/her future income should not be made at the expense of his/her creditors. In the same way where the employer operates a SAYE saving scheme (where a proportion of the bankrupt’s income is deducted at source to purchase shares in the employing company), this expenditure should be investigated and disallowed, to ensure that the full amount of income available is included in an income payments calculation.

I hope that is useful.


Dennis
@natdebtline

TheGardener

The life assurance (unless a compulsory part of a mortgage) might be best left until AD
With pensions - if the pension is government recognised scheme and you were already paying into it prior to BR that you can continue as long as you are not 'overpaying' .
If you already have an IPA then there is nothing stopping you joining a workplace pension by making savings in other areas of your budget to make up the difference.

doomandgloom

Hi guys

Useful info as always!

What's happening is the company i work for is being taken over and there's talk of being able to pay into a work based pension where the employer pays in too.
I don't have a pension and have never paid into one but have thought for some time that I probably should. Would I be able to contribute prior to discharge?

I also do not have an IPA although there is a possibility of a slight change in pay after the takeover so it could be possible (sigh). If the advice is to wait until after discharge I am assuming if an IPA is put in place then I would need to wait until the three years is up before I could pay into one?

Also, what would be classed as overpaying?

As for life insurance that seems like an area to come back to later on. It's something I want to do now I have a little one but if the OR can claim it i don't see much point. Again though, if the advice is to wait after discharge what would be the situation regarding being subject to an IPA?

Thanks again

TheGardener

You can join a pension anytime as long is it a government recognised scheme. (Most are) - but you would need to find the money from your existing income which if you don't have enough surplus for an IPA now, wouldn't be any harder to find the money for than it will be after AD. If you do get a pay rise, then an existing approved pension payment would usually be allowed on a revised SOA if they ask for one.

doomandgloom

Ah that's brilliant, thanks.

In that case I think I may partake (I think it will be automatic enrolment anyways) so long as I can afford to.

I've been nebbing at the government website to look at typical minimum contributions. These tend to range between 1 and 4% of annual salary . As long as my contribution was within these parameters then would the OR have any objections?


I'm so glad I have This forum to fall back on. I don't think I'd be coping too well if the support from this forum wasn't available. That in mind... I would change my username but have no idea how to. I don't feel as morbid as I did about the whole thing as I did when I was first declared. So thanks everyone for your input

tigerfeet2006

Nope! the OR will not have an objection to those contributions. Sp partake away!

doomandgloom

I think i may have misread and misunderstood some of the advice on here. Been very sleep deprived lately!

Can I pay into a pension or is it wise not to? I found out yesterday that it will be automatic enrolment and that once that happens i would need to opt out if I did not want to pay into it.

I've read your responses and the TM. I have interpreted the TM to read at the time of the BR order. I cannot find anything that mentions whether paying into a pension would be allowable after a BR order or before discharge.

I did come across something (don't know how to quote) from somewhere in the TM that said in terms of establishing whether someone is overpaying into a pension that 15% contribution is a guideline for the OR to go from.... Again this was in the context of what the bankrupt was paying at the time of bankruptcy.

I realised recently that I do in fact pay into a pension but my contribution is only £2 per week. Hardly breaking the bank. I also haven't declared this to the OR but they are in receipt of wage slips every time they do a review. (i didn't realise which is why I didn't declare it, not.sure if I should bring it to the OR's attention now)?

The new workplace pension will be set at a higher rate. I believe it is around 4% of annual wage. Equivalent (if I have worked it out right) to about £50 per month.

I think the reason why I am asking is because upon the payrise I may have a slight surplus (although that is very dependent on meeting the OTE - I'm not the best sales person in the World). As mentioned earlier i will have a dual role but I have worked out if I was allocated sales work full time that I am likely to have a surplus of £60ish. The 4% contribution would bring me below the IPA threshold... I'm just trying to find out how that would be viewed? I.e. Would that be a disadvantage to creditors? (just for the record I don't have a problem with an IPA considering how little I would be paying vs how much I owed but there's no incentive then to increase hours/find a better job and try and move out of the parents house with the little one).

On the flip side I would start paying tax. But this will be after the financial year of bankruptcy. Can the OR claim this on a NT IPA or does this only apply up until the end of the current tax year?


Sorry that this is such a long post. I'd rather know what I can and cannot do beforehand. Really wouldn't want to get into trouble for doing something I shouldn't.

doomandgloom

Sorry maybe I need to clarify (confused my response with a different post)

I will have a dual role upon takeover, sales and admin. Admin role when allocated would not attract commission.

So if I ended up doing sales full time then that is when I'm likely to get a surplus.

Wish it was more straightforward!

tigerfeet2006

When you start your new role you can take advantage of the pension scheme, that is fine and the OR shouldn't quibble.about it.

No the OR will not claim a NT code, you will be paying tax as normal, you lucky thing.

doomandgloom

Thanks tigerfeet2006

That makes me feel a whole lot better knowing that there won't be issues with this.