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| Debtdummy |
Posted - 28 February 2007 : 01:30:38
Information on your pension when bankruptcy occurs. You may want a cup of tea while you read. It is long-winded.
What will happen to my pension?
Taken from http://www.insolvency.gov.uk
The pension that you may have already or could be entitled to receive
in the future:
• State pension - this will include any payment
from the State Second Pension (S2P)
(Formerly SERPS.)
• Occupational pension - This is a scheme set
up by an employer to provide members with
retirement and death benefits. Contributions
may have been made by the employer, you
as an employee, or both.
• Personal pension - This is a personal
pension policy you have taken out with an
insurance company to pay you benefits in
later life. (Retirement annuity contracts are
similar to personal pension policies. If you
have a retirement annuity contract, it will be
treated in your bankruptcy in a similar way to
a personal pension policy.)
• Group personal pension - This is a personal
pension policy taken out with a pension
provider, often on favourable rates and terms
negotiated by your employer or trade
association. After a bankruptcy order is
made, a group personal pension is dealt with
in the same way as other personal pension
policies.
You may have more than one type of pension
and you may have several pensions of the same
type. For example, you may have occupational
pensions from your present and previous
employers.
What information will the official receiver and
my trustee need?
You have a duty to co-operate with, and to
provide all the information required by, the official
receiver and your trustee (who will be an insolvency
practitioner if he or she is not the official
receiver). They will need the following details
about all the pensions you are receiving, or will
be entitled to receive in the future:
• the name of any occupational pension
scheme which you, and/or your present or
former employer acting on your behalf, have
contributed to;
• evidence of the amount of your benefits
under occupational pension scheme(s) and
the amount of contributions to them,
particularly in the last two years;
• the policy details for all personal pensions
you have taken out;
• if you are receiving a pension, the amount of
your regular benefits; also the date you
received any lump sum and the amount of
that payment.
How will bankruptcy affect my pension?
Following the introduction of the Welfare Reform
and Pensions Act 1999, where a bankruptcy
order was made on a bankruptcy petition which
was presented on or after 29 May 2000 all
pension schemes which have been approved by
HM Revenue and Customs do not form part of a
bankrupt's estate and therefore cannot be
claimed by the trustee in bankruptcy.
What are approved pension schemes?
Approved pension schemes are essentially:
• any pension schemes registered under
section 153 of the Finance Act 2004
(essentially schemes registered by HM
Revenue and Customs plus annuity
contracts used to secure benefits under a
registered pension scheme which do not
provide for immediate payment of benefits)
• all retirement annuity contracts;
• any personal pension schemes approved by
the HM Revenue and Customs for tax
purposes; and
• stakeholder pensions.
These are the most common approved pension
arrangements, but yours may be different. If the
official receiver is in any doubt as to whether your
pension scheme has been approved by HM
Revenue and Customs, he/she will write to your
pension provider for confirmation.
Once the official receiver is satisfied that your
pension is an approved pension arrangement
he/she will write to you and to your pension
provider confirming that the pension does not
form part of the bankruptcy estate.
What if my pension scheme is an unapproved
scheme?
If your pension scheme is unapproved, you may
still be able to exclude it from your bankruptcy
estate by applying to court for an exclusion order
or by making a qualifying agreement with your
trustee. This is something to discuss with your
trustee.
If a pension policy does form part of your
bankruptcy estate, the official receiver or
insolvency practitioner trustee can claim the lump
sum and the regular payments even after your
discharge from bankruptcy. It may be possible for
you to 'buy back' your interest in the pension
policy from the trustee in bankruptcy and you
should speak to your trustee about this.
What if I receive pension payments while I am
bankrupt?
Even if the trustee cannot claim your pension or
any part of it, if you receive payments from a
pension before your discharge from bankruptcy,
then the payments can be included in any
calculation for an income payments order or
income payments agreement. (This is where you
agree, or the court may order you, to pay part of
your wages, salary or other income to the
trustee.)
What about my state pension?
Your state pension or any payments from the
State Second Pension (S2P) (Formerly known as
SERPS) do not form part of the bankruptcy
estate.
Should I continue making pension
contributions after the making of the
bankruptcy order?
Pension contributions can continue under your
existing pension arrangements or under new
pension arrangements made after the bankruptcy
order. If your trustee claims all or part or your
pension benefits, then it may not be in your
interest to continue to make payments,
particularly into a personal pension scheme, as
you may not receive the full benefit of them. If
you have any concerns about continuing to make
payments, you should seek advice from your
pension provider or an independent financial
adviser.
What happens to my pension scheme death
benefits if I die before my discharge from
bankruptcy?
Sometimes a bankrupt dies between the making
of the bankruptcy order and the date of their
discharge from bankruptcy. If the pension
scheme does not provide for a nominated
beneficiary (or class of beneficiary) to receive the
death benefit, the death benefit can be claimed
by the trustee.
What if I was made bankrupt on a bankruptcy
petition presented before 29 May 2000?
If you were made bankrupt on a bankruptcy
petition presented before 29 May 2000, your
trustee in bankruptcy may claim part or all of your
pension, whether you are receiving it now or it is
due in the future.
If you have a personal pension policy:
From the date of the bankruptcy order all rights
and benefits under a personal pension policy vest
in the bankruptcy estate. This means that your
trustee in bankruptcy has the same rights under
the policy as you did before becoming bankrupt,
and so cannot claim the pension benefits until
you reach the earliest retirement age under the
terms of the policy (e.g. your 50th birthday).
If you are a member of an occupational pension
scheme:Some occupational pensions have 'forfeiture
clauses'. These mean that if you are made
bankrupt, you automatically lose your pension
rights so the trustee cannot claim them as an
asset. Your trustee will inspect the rules of your
pension scheme to see whether it has a valid
forfeiture clause. If there is no valid forfeiture
clause, then your trustee in bankruptcy will claim
your pension rights for the benefit of the
bankruptcy estate.
If your trustee can claim your pension benefits
under a personal pension or an occupational
pension, this will include any lump sum as well as
the regular payments.
If your trustee claims any part of your pension,
they will collect it when you reach retirement age
under your pension arrangements, even if this is
after your discharge from bankruptcy.
The trustee cannot claim:
• your state pension or any payments from the
State Second Pension (S2P)(Formerly
known as SERPS);
• any protected rights - these rights arise in
any pension you may have where you or
your employer have contracted out of
SERPS. They represent the equivalent of the
SERPS benefits within your pension. In an
occupational pension scheme, the protected
rights may be known as 'a guaranteed
minimum pension' or 'benefits under the
reference scheme test'.
How can I find out more?
This leaflet is for general guidance only. If you
have further questions about your pension and
your bankruptcy, you should ask your
professional adviser, the trustee handling your
bankruptcy or your pension provider.
Please note that The Insolvency Service and
official receivers cannot give legal or financial
advice.
You should seek this from a solicitor, a
qualified accountant, an authorised insolvency
practitioner or a reputable financial adviser or
advice centre.
Further information about bankruptcy is available
in the following Insolvency Service publications:
• Guide to bankruptcy
• Can my bankruptcy be cancelled?
• When will my bankruptcy end?
• What will happen to my home?
• What will happen to my bank account?
• What happens when you are interviewed by
the Official Receiver?
• Fast track voluntary arrangements
You can obtain further copies of this booklet
from the following website:
http://www.dti.gov.uk/publications
You may also order copies of our publications by
telephone by calling the Publications Orderline on
0845 015 0010 (calls to this number are charged
at national rate). You may also fax orders to the
Orderline on 0845 015 0020. Minicom users
should telephone 0845 015 0030.
Publications are also available on our website
www.insolvency.gov.uk
7 January 2007 URN07/542
All I have left is my sense of humour. |
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