How safe is a Self Employed pension ?

ricky101

Hi,

Not quiet a true pension question but seemed the best section.

If an average working self employed person has a personal pension fund and they are sued for damages ( not work related) can their pension fund be ordered to be used to pay the damages the court orders ?

I would have thought such a pension fund was really just classed as a form of savings account / asset , but not sure if some things could be different ?

thanks

Sarastro

What do you mean by 'personal pension fund'? If that is a defined Pension scheme of some description I think it's unlikely it could be classed as a personal asset because it's likely the money is being held by a Trust (although I'm not a lawyer). If you have money invested in property or something like that and are just calling it a 'pension fund' then, yes, it is a personal asset.

If you're concerned about being sued for damages, you'd be better off as a limited company so any potential liabilities are distanced from you personally as it would be the company's assets that would be used to pay the damages rather than yours.

ricky101

Hi,

I'm talking about someone self employed who has a personal pension scheme with one of the main providers eg L&G or Prudential for example.

The type of claim I am talking about is against the person for personal damages, nothing to do with their work or company.

Jenniefour

If this is a real situation best seek legal advice.

AnotherJoe

My understanding is that a pension can't be claimed by creditors even in the case of bankruptcy so if that's correct the money can't be directly claimed, however if you were ordered by courts to pay so much a month, then that might need to come from your pension ultimately.

Aretnap

In most circumstances pensions are excluded from bankruptcy proceedings so cannot be taken by your creditors. This applies whether the creditor is your credit card provider, or someone whose house you accidentally burned down while fixing a boiler (or whatever self-employment-related mishap you're imagining). It's one of the many advantages of saving money in a pension.

Once you actually withdraw the money from your pension it becomes fair game for your creditors, so you would have to wait until your bankruptcy period had expired (or the debt was settled in some other way) before touching it in order to take full advantage of this rule.

I imagine the situation would become more complicated if you were deliberately using your pension to hide money from your creditors, for example by making a massive payment into your pension knowing that bankruptcy proceedings were about to start (in much the same way that you can get into a lot of trouble if you start doing things like signing the house over to your wife or going on round the world cruises when you have creditors chasing you) so if this relates to a real situation rather than being a hypothetical question then you should get proper legal advice before doing anything.

ricky101

Thanks, but its not about me.

Its about someone else being chased for compensation for causing damage to someone elses house, while working on their own house.

Too long a story for this post, just wanted some clarification on that one point, which sounds like it cannot be touched directly.

Thanks again.