High Court decides pension assets may be used to pay bankrupt's creditorsFriday, June 15, 2012
In this case, Raithatha v Williamson, the bankrupt, Mr Williamson, had pension savings in a scheme where the minimum age for drawing benefits is 55.
Mr Williamson was 59, but was still working and had not yet exercised his right to take his pension.
The trustee in bankruptcy sought an income payments order in respect of Mr Williamson’s pension entitlements, which would make the money available to pay his creditors. The Court held that a pension which a bankrupt is entitled to receive on demand under the scheme rules, but has not yet elected to receive, constitutes income in respect of which the court may make an income payments order. Mr Williamson has been granted permission to appeal.
Prior to this case, pensions, which had not yet come into payment were generally thought to be protected on bankruptcy. Many pension schemes give their members the right to draw a pension from age 55. The case means that pension savings of many individuals will only remain protected on bankruptcy as long as they are under age 55.