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Pension pots not safe in Bankruptcies
A High Court ruling means untouched pension pots of undischarged bankrupts could now be used to pay of creditors.
The ruling handed down today (April 4) potentially changes the previously position which considered pensions out of reach as it was not considered as “income”.
Today’s judgment in Raithatha v Williamson states a bankrupt does have an entitlement to a payment under a pension scheme not merely where the scheme is in payment of benefit but also where, under the rules of the scheme, he would be entitled to payment merely by asking for it.
The ruling was made in the case of Situl Raithatha, of Springfields Business Recovery & Insolvency, who was acting as trustee in bankruptcy and brought the application to make Michael Williamson, 59, access his pension.
Commercial law firm EMW principal Damon Watt, who acted for Mr Williamson says the decision affects anyone of pensionable age under their pension scheme, even where they might not have reached the current “state” retirement age of 65, who becomes bankrupt.
He said: “Up until now those who had reached retirement age were perceived to have some limited protection over their pension but this decision strips away that protection.
“The judgment will have a disproportionately adverse impact on more senior citizens who have private pensions whereas younger bankrupts who have not yet reached pensionable age under the scheme will not be subject to such an order depriving them of an element of their pension pot.”
The ruling handed down today (April 4) potentially changes the previously position which considered pensions out of reach as it was not considered as “income”.
Today’s judgment in Raithatha v Williamson states a bankrupt does have an entitlement to a payment under a pension scheme not merely where the scheme is in payment of benefit but also where, under the rules of the scheme, he would be entitled to payment merely by asking for it.
The ruling was made in the case of Situl Raithatha, of Springfields Business Recovery & Insolvency, who was acting as trustee in bankruptcy and brought the application to make Michael Williamson, 59, access his pension.
Commercial law firm EMW principal Damon Watt, who acted for Mr Williamson says the decision affects anyone of pensionable age under their pension scheme, even where they might not have reached the current “state” retirement age of 65, who becomes bankrupt.
He said: “Up until now those who had reached retirement age were perceived to have some limited protection over their pension but this decision strips away that protection.
“The judgment will have a disproportionately adverse impact on more senior citizens who have private pensions whereas younger bankrupts who have not yet reached pensionable age under the scheme will not be subject to such an order depriving them of an element of their pension pot.”
