Fears that creditors could force someone in bankruptcy to hand over their entire pension pot under pension freedoms have reduced.
It is possible for a trustee in bankruptcy (TIB) to place an IPO on pension incomes in payment, allowing them to claim income in excess of that required for ‘reasonable domestic needs’ for up to three years.
The recent court case centred around whether the TIB could force someone to access their benefits so that an IPO could be lodged against it.
The case hinged on the right to pension income. The ruling stated that although there were uncrystallised funds and the recipient was over the minimum pension age, there was no entitlement to income as there was no compulsion to take it.
Had the decision gone the other way, there were concerns that the whole of an individual’s pension savings could have been exposed to an IPO, as under the new pension freedoms there’s no longer a need to buy an annuity.
A second case involved the bankruptcy of an individual who had crystallised their pension and was in drawdown. The decision in this case was to allow an IPO against the income.
Uncertainty remains around defined benefit schemes and occupational money purchase plans. Will the deferral of benefits past the scheme’s normal retirement age avoid an IPO on income, or will they still be considered to have a right to income at normal retirement age and therefore be forced to take it?
In this issue
- Miller, Brexit and BreUK-up
- Power to the people?
- Prerogatives, Parliament and the constitution: plus ça change?
- Decisions in high places
- Reading for pleasure
- Journal magazine index 2016
- Opinion: Callum Sinclair
- Book reviews
- President's column
- Have you heard of ScotLIS?
- People on the move
- Article 50: the final say
- Where courts fear to tread
- "Wake up": how young lawyers see the future
- How healthy is our legal aid system?
- Challenging assumptions
- Planning to deliver
- Contact and the fear factor
- And the bill goes to...?
- Pakistan to join Child Abduction Convention
- Dress to impress?
- Handcuffing of prisoners and article 3
- Turning up the heat on workplace change
- Scottish Solicitors' Discipline Tribunal
- Not just for the green welly brigade
- Five by five
- Law reform roundup
- Relief over pensions and bankruptcy ruling
- Helpline plus
- Spill the beans on legal aid fraud
- The art of bringing the good news
- Cybercrime: how are you protected?
- Ask Ash
- One year rule becomes three
- From the Brussels office