New Beginning have for years advised clients on their debt options and since we have added a regulated financial advisory service to our offering one particular issue comes up time and time again. What will happen to ≠my pension if I go bankrupt or if I enter an insolvency process?
Well, bear in mind that all situations deserve their own individual attention, but I can give you some guidance on how pensions are generally treated.
Pension money is ring fenced insofar as it is not readily available. If you are about to retire or indeed could retire in the next 5 years it is very important that you consider what form your pension assets are in. Pensions come in various shapes and sizes and as such it is vitally important that your pension is structured in the most favourable way for you to retain control of your retirement savings.
Pension’s law in Ireland allows client’s access to their retirement assets from the age of 50 all the way up to 75 depending on the plan type you are in. Now if you happen to be in a pension arrangement that allows access to your money at 50 and you are approaching or over 50, then it might be advisable to move it to a different pension arrangement that doesn’t allow access until you reach 60 for example. Indeed you might simply be able to change the retirement age of your existing plan with the stroke of a pen. This could mean the difference between holding onto your retirement savings or not.
Also consider what form your pension is in? Is it a cash fund or is it income? Reasonable Living Expenses guidelines allow clients to have a certain amount of income but not cash assets. If you have €200k of a fund at retirement, this could be converted into an annuity which will deliver a client a regular income for life. Many would consider the annuity rates today to represent bad value for money, and I would absolutely agree with them. However if I faced a decision between losing all of my €200k or keeping an income of say €10k every year for the rest of my life, all of a sudden an annuity starts to look like a very attractive option.
There are many different scenarios and many different solutions. Far too many to cover here. But in summary if you are considering entering a debt process and have a pension fund built up, it is imperative you seek advice. It could be the difference between you holding on to your pension or losing it in its entirety.
If you would like to discuss your own pension situation, please feel free to get in touch with me directly on email on firstname.lastname@example.org or contact the office on 01-5240000 and I would be happy to look at your situation to find out.