If you are paying high interest on credit cards or other debts should you use every penny possible to reduce your debts? Or should you stop if your finances have been squeezed by cost of living increases? There are many good reasons why you should continue to make pension contributions. More than 10 million people save into their pension through auto-enrollment, where employers have to … [Read more...]
Pensions and debt
It can be hard to balance the need to make long-term savings for your old age against your short-term priority of dealing with your problem debts. After April 2015 it has become possible for many people to take money from a personal pension if they are over 55 and the most common reason for doing this is to pay off debts. 
These articles look at whether this is a good idea and what the drawbacks are. And if you are already in some form of debt management, or are insolvent (bankrupt, in an IVA or in a DRO) or thinking about some of these options, you need to know how your pension could be affected.
The Pensions and Debt Overview page groups articles by topic. This pages lists the articles in date order.
Is your pension safe if you go bankrupt?
If you expect to go bankrupt soon you may be worried about whether your pension will be safe. The Insolvency Service published a summary of its new guidance on pensions and bankruptcy in England and Wales in 2015 after the "Pension Freedom" changes that year made it possible for many people to take money out of their pension from age 55, even if they are still working. There was some legal … [Read more...]
Pensions safe in bankruptcy after Appeal Court decision
Following an Appeal Court ruling on Horton vs Henry, published in October 2016, pensions are once again safe if you go bankrupt. The full judgment is here. The background to this case was: before 2000, pensions formed part of a bankrupt's estate and would be taken once the bankrupt reached pension age; the Welfare Reform and Pensions Act changed this. For people going bankrupt after … [Read more...]
Pay debts with pension? Avoid this tax trap!
If you are over 55 and thinking of taking money out of a personal pension so you can clear some debts, one of the things you need to be especially careful about is "pensions recycling". If you accidentally get caught up in these tax rules, HMRC can impose an additional tax charge of up to 70% of your tax-free cash - ouch! Use a pension to pay off debt - then rebuild pension There many other good … [Read more...]
Is your pension safe in a DRO?
You may be worried about whether your pension will be safe if you are already in, or have finished, a Debt Relief order (DRO), or if you are thinking about applying for a DRO. The 2015 pension changes mean that many people over 55 can now withdraw some or all of their pension. so what happens if you take money out? Can you lose your pension? Can you get a DRO if you have a good pension? I … [Read more...]
Will my pension be safe in a DMP?
The pension changes that came in in 2015 gave many people over 55 a new option for paying off their debts, by taking money from their pension pot. I've looked at whether this is generally a good idea in Should you use your pension to pay your debts? but in this article I focus on people who are already in a Debt Management Plan (DMP). This article is relevant for people who are over 55 (or … [Read more...]
Should you use your pension to pay off your debts?
More people than ever are retiring with significant amounts of debt. One in three people planning to retire now expects to have debts - an average of over £17,000. And annuity rates have been low for a long while, although they should be starting to rise as interest rates edge up in 2022. So with more debt to pay and their likely pension income getting less, it's not surprising that many people … [Read more...]
Is your pension safe in an IVA?
Many people who are over 55 can take some or all of their pension pot in cash before they actually retire. You need to know how this may affect you if you are considering an IVA. If you already have an IVA, you may be wondering if your pension is safe. First a warning: IVAs are individual arrangements and it is possible for almost anything to be included or excluded in the detailed terms and … [Read more...]
New Insolvency Service guidelines on pensions
On 26 March 2015, the Insolvency Service published Undrawn pension entitlements: Summary of guidance for insolvency practitioners and debt advisors. With "pensions freedom" coming into force on 6th April 2015, the Insolvency Service's aim was to clarify the murky situation around bankruptcy and pensions. Further clarification then came with the Guidance Issued to Receivers and Guidance Issued to … [Read more...]
Pension changes – the challenge for debt advice
This is a guest post by Nick Lord. It argues that the new pension rules are a game-changer for debt advisers and that debt advice agencies need to put measures in place to ensure that their advisers can provide best advice post April 2015. Nick is a consultant on money advice and personal finance issues working with Government departments, regulators and firms. Debt Advice and the Proposed … [Read more...]