Bankruptcy question

debt_doctor

KentishLady wrote: »

I forgot to say - can he be forced to take the % lump sum?

It would appear so, yes........


61.26c Claiming pension income where pension drawdown is available
Where it is possible to arrange for the drawdown of a bankrupt’s pension to facilitate an IPO/A (see paragraph 61.26a), the official receiver, as trustee, should proceed accordingly.
By way of illustration where a pension has not been brought into payment the official receiver should seek to agree an IPO/A which will require the bankrupt to bring the pension into payment. Assume that today the bankrupt has £500 general income and £520 of allowable outgoings (deficit of income over expenditure of £20). Assume further that his/her pension fund will produce a lump sum of £8,500 and a monthly annuity of £88.
In that example, the official receiver should seek an IPO/A for an initial payment of £8,480 (which allows for his £20 shortfall in outgoings over income) and thereafter 35 payments of £68 per month reflecting the surplus of income (£500) plus annuity (£88) over outgoings (£520).
In considering the position official receivers are reminded that a pension fund of less than £18,000 can be realised as a single lump sum through HMRC triviality rules (see paragraph 61.18a).
The official receiver, as trustee, may also seek to recover any excessive pension contributions (see Chapter 31.4B, Part 9).
Further guidance on IPO/As, including information on the inclusion of pension income in a calculation, can be found in Chapter 31.7, paragraph 31.7.49.


I would add, that until a fairly recent court case, the insolvency service could not force a bankrupt to take a pension early. Hence I do not yet have any practical experience of this happening to any of my clients.


So much for "pensions are exempt assets in bankruptcy!"


DD