Trustees in Bankruptcy unlikely to gain access to pension funds...


Confusion has arisen from a recent High Court ruling in Horton v Henry as to whether Trustees in Bankruptcy can access not in payment/uncrystallised pension funds. A previous ruling permitted an application for an Income Payment Order ("IPO"), compelling the draw down of a Bankrupt’s pension, and payment of a lump sum and any derived income to the Trustee in satisfaction of his debts.FACTS In the recent ruling,

Mr H was made bankrupt at the age of 58, and had an interest in a Self-Invested Personal Pension ("SIPP") with an estimated value of over £900,000. Mr H could have elected to draw down his 25% tax free lump sum, but the true value of the SIPP would not be known until it crystallised. Mr H had three further pension policies, which would provide an annuity of around £2,500, and could also have been taken as a lump sum. The Trustee sought an IPO for the lump sum and the annuity in the next three years.


The court considered the earlier ruling to be incorrect. Where a pension was not being drawn down, the pension holder was not entitled to payment of any sum until and unless he made an election on how to do so. That election was the pension holder's decision alone. Mr H was not entitled to payment under his pensions "merely by asking for payment". There were a variety of options open to him. Only after elections had been made would payment be due and owing to him. Only then did he become entitled to any payment. Neither the Trustee nor the Court could order Mr Henry to elect in any particular way. Until the Court of Appeal reviews this decision, uncertainty will remain. However, it seems unlikely Trustees will be able to gain access to pension funds where it is not in payment/is uncrystallised

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