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Bankruptcy and your pension

This section covers the questions you are most likely to want answered about your pension if you are made bankrupt:

How will bankruptcy affect my pension?

Part or all of your pension may be claimed by your trustee in bankruptcy, whether you are receiving it now or it is due in the future.

Our team of specialists are here to help you find an alternative to Bankruptcy or to assist with your Bankruptcy application. You can call our helpline on 0800 088 2147 or simply the online test to check if you qualify. Find out if you qualify for an IVA
Apply for Bankruptcy online

What type of pension do I have?

There are basically four types of 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 Earning Related Pension Scheme - 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 plans. If you have a retirement annuity contract, it will be treated in your bankruptcy in a similar way to a personal pension plan.)
  • Group personal pension - This is a personal pension policy taken out with a pension provider and often your employer or trade association will have negotiated favourable rates and terms. Following a bankruptcy order, a group personal pension is dealt with in the same way as a personal pension.

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.

Will I lose all my pension?

Whether or not you are currently receiving your pension, the trustee cannot claim: your state pension or any payments from the State Earnings Related Pension Scheme (SERPS);

  • any of your occupational pension if your occupational scheme has a clause forfeiting pension benefits following bankruptcy (the trustee could claim the benefit of a personal pension policy, even if it has a similar clause); and
  • 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 might be known as ‘a guaranteed minimum pension’ or ‘benefits under the reference scheme test’.

When he or she has all the information about your pension, the official receiver or your trustee will be able to tell you what part, if any, of your pension is being claimed as an asset in your bankruptcy. Even if the trustee cannot claim your pension, or any part of it, the amounts you receive may still be included in the calculation of your income, if the trustee applies to the court for an income payments order’ during your bankruptcy. (The court may order you to pay part of your wages, salary or other income to the trustee.)

What happens to the lump sum payable under my pension?

If your trustee can claim your benefits under an occupational pension scheme or personal pension, this will include any lump sum that is payable as well as the regular payments you are entitled to receive.

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What information will the official receiver and/or 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 is not the official receiver). The following details will be needed 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 have contributed to on your behalf;
  • any documents given to you about the amount of your benefits under occupational pension scheme(s) and the amount of contributions to those scheme(s), particularly in the last two years;
  • the policy document for all personal pensions that 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.

Should pension contributions be paid 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. But it may not be in your interest to continue to make payments, particularly to a personal pension, because you may not receive the full benefit of them. You should seek advice from your pension provider or an independent financial adviser before making any payments.

Can anything be done to stop my trustee from claiming my pension?

Pension rights and benefits cannot be assigned (transferred). However, your trustee in bankruptcy may consider giving up his interest in the pension, which would mean that the benefits would come to you when they become payable. A relative or friend of yours would have to be willing to provide a suitable sum of money, based upon the current transfer value of your pension fund (excluding protected rights), before your trustee is likely to agree to this option. This is something you should discuss with your trustee so that you have all the relevant facts about your position and that of the person providing the money.

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If my trustee has not collected my pension before my discharge from bankruptcy, will it become payable to me?

Any part of your pension that is claimed by your trustee will be collected by him when you reach the retirement age under your pension arrangements, even if this is after your discharge from bankruptcy.

Expert help and advice when you need it most

Our panel of specialists can quickly advise you if you qualify for an IVA,
Debt Management Plan, Trust Deed as an alternative to bankruptcy.
Simply call the team on 0800 088 2147.
Alternatively take the online debt test and find your best solution. Find your best solution with the online debt test

Bankruptcy Alternatives

Become stress free from as little as £100 pcm
With a Debt Management Plan you could simply pay one affordable monthly payment and no longer have to deal with your creditors..
See if you qualify  DMP eligibilty test
Write off up to 70% of your debt
If you qualify for an IVA you could:
Write off up to 70% of your debt
Freeze all interest & charges
Keep your house

See if you qualify  IVA eligibility test
Scottish Resident?- be debt free in 36 months
Be DEBT FREE in 48 months using Scotland's answer to the IVA.
See if you qualify  Trust Deed eligibility test
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