Pensions

Introduction

1) What is a pension?

Pension is a general title for a variety of personal and occupational pension arrangements that provide retirement and death benefits.

There are a number of different pension options available:

a     Occupational pension schemes  - set up by employers for their employees. 

b     Personal pension schemes – usually  obtained through financial services companies, e.g. insurance companies, banks, investment  companies or building societies.

c     Retirement annuity contracts – if a personal pension policy was taken out before 1988, it will be described as a retirement annuity contract.

d      Stakeholder pensions – these are low-cost, flexible, private second pensions available from a range of financial service companies and other organizations such as trade unions. 

e     State pensions - almost all bankrupts will be entitled to receive a state pension on reaching the state pension age which is currently 65 for men and 60 for women (women's state pension age will start to change to 65 gradually from 2010)

Like other state benefits and allowances the official receiver cannot claim state pensions. If a bankrupt is receiving state pension payments, the official receiver can include these in any calculation for an income payments agreement or income payments order but should not include pensions payments by way of guaranteed minimum pension or the protected rights element of pension benefits.

The official receiver will only consider accepting an income payments agreement or applying for an income payments order where the bankrupt's sole or main income is from  a state pension in exceptional circumstances.

This Case Help Manual part is divided into 4 separate sections:

Part 1 and Procedure A  Bankruptcy pensions where the order is based on a petition that was presented on or after 29 May 2000;

Part 2 and Procedure B  Bankruptcy pensions where the order is based on a petition that was presented before 29 May 2000;

Part 3 and Procedure C Company pensions.

Part 4 Pensions jargon - an explanation of pension terms presented in alphabetical order

 

2) Pensions In Bankruptcy

Bankrupts will generally have made contributions into a pension scheme or, more unusually, may have operated a pension scheme for their employees.

On 29 May 2000 provisions of the Welfare Reform and Pensions Act 1999 came into effect which meant that in the majority of bankruptcies, the bankrupt's pension benefits no longer vest in the official receiver so he/she is no longer able to claim them. There is therefore a different procedure in place depending on whether the bankruptcy petition was presented before or after 29 May 2000.

In bankruptcy cases where the bankruptcy petition was presented on or after 29 May 2000 the majority of pensions will not vest in the trustee. This means that in most cases the official receiver cannot claim any payments that the bankrupt receives from his/her pension scheme.

 

3) When can the official receiver claim pension benefits?

The official receiver may be able to claim some or all of the bankrupt's pension where:

  1. The bankrupt is receiving payments from their pension in the period between the bankruptcy order and discharge from bankruptcy. If this is the case, with the exception of payments by way of guaranteed minimum pension or protected rights, the official receiver may consider claiming part or all of the pension benefits under an income payments agreement or income payments order.
  2. The official receiver receives information to suggest that the bankrupt has made excessive payments into their pension scheme and the payments have unfairly prejudiced their creditors, he/she may apply to court for recovery of the excessive pension contributions.
  3. The bankruptcy petition was presented before 29 May 2000 see part 2.