Martin Jones: How is a pension treated in the event of bankruptcy?

Pensions and bankruptcy explained

clock • 3 min read

With the current dismal economic backdrop in mind, Martin Jones gives a reminder of how pensions are dealt with if the worst comes to the worst and a client finds themselves on the brink of bankruptcy...

Under current insolvency legislation, workplace and personal pensions are excluded from a bankrupt estate and cannot be claimed by a Trustee in Bankruptcy (TIB). This is on the proviso that the pension scheme is registered with HMRC (the vast majority of pension schemes are), with the state pension also being exempt. Therefore, a TIB cannot simply dip into a client's pension in order to repay their creditors. Exceptions to the rule That's not to say that a TIB does not have any avenues for recourse. If a client has made ‘excessive' contributions into their pension in the period bef...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

Government publishes Pensions Investment Review interim report and launches DC and LGPS consultations

Government publishes Pensions Investment Review interim report and launches DC and LGPS consultations

Report published as Reeves delivered inaugural Mansion House speech

Jonathan Stapleton
clock 15 November 2024 • 4 min read
Chancellor to create DC 'megafunds' in Mansion House growth bid

Chancellor to create DC 'megafunds' in Mansion House growth bid

Chancellor to unveil ‘biggest pension reforms in decades’

Martin Richmond
clock 14 November 2024 • 3 min read
Pensions dashboards could leave savers at risk of 'poorly informed' transfers

Pensions dashboards could leave savers at risk of 'poorly informed' transfers

Research finds two-fifths of savers likely to use dashboards to carry out a pension transfer

Martin Richmond
clock 13 November 2024 • 3 min read