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Bankruptcy and Pensions. What are the rules?

10 years ago - Posted by

I am worried that is I declare myself Bankrupt I will lose my pension, then I really will have nothing.

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2 Answers

TAD Member

10 years ago

Thank you for your reply. I’m pretty sure that the Teachers Pension Scheme is a qualifying scheme but we are concerned that the lump sum may be at risk if taken during the bankruptcy period. Could my wife:-

1. defer taking her pension until after the bankruptcy is over; or
2. roll the lump sum onto an anuity

What powers does the trustee have in these circumstances?

TAD Member

10 years ago

Since the bankruptcy laws were changed on May 29 2000, pensions have been excluded from bankruptcy. But there are few watchwords.

The pension must be approved by H M Revenue and Customs. If it is not then, you can ask the court to exclude it from your estate. But if you cannot ring fence the fund with an exclusion order creditors can seek repayments both from the lump sum and any monthly payments you make.

If your pension is due whilst you are bankrupt any money you receive will count as income and the official receiver can order it to be used to pay back debts. So  during the three years following your bankruptcy, if the income you get from your pension exceeds what your basic living expenses should be there is a surpus and this is fair game to your trustee.
 

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