Can Credit Card Debt Be Offset Debt Against Pension Savings?

Gustygoat

Hi all,

Have searched the forum without success to the following question:

Can a creditor such as MBNA (same banking group as Halifax) offset a soon to be defaulted credit card debt against a Scottish Widows (also same banking group as Halifax) private pension?

I know they can against bank accounts - hence why I plan to close my Halifax account shortly - but are they allowed to touch pension savings?

Many thanks,

GG

Brie

As far as I'm aware pensions can't be touched by creditors, certainly not before you are 55.  I know there have been previous discussions about people over 55 wanting to cash in their pension in order to clear their debts and they have been warned off doing so.  

I'd be happy to hear if someone knows differently.

MEM62

I do not believe that they can touch your pension.  

sourcrates

Under age 55, no one can tough your pension rights, so its safe from all and sundry.

However, once you become eligible to claim your pension, things can change, this from a solicitors webpage:

"In recent years, there have been several cases in which a pension saver has been compelled by the Court to access their pension fund in order to pay a creditor. The Courts have now established the principle that debtors cannot protect assets in pension funds when they have a right to make withdrawals which could be used to satisfy a judgment debt".

and this:

"Generally, pensions law prohibits a member’s right to a pension being assigned, commuted, surrendered, forfeited or made subject to a lien or set-off. Any agreement making such an arrangement is unenforceable and a Court cannot make such an order. The law deals specifically with the inalienability of rights to a pension under an occupational scheme. However, there are no equivalent provisions for rights under a personal pension plan, although the wording of the scheme policy may prevent such pension rights from being assigned".

So it appears to depend on what type of pension you have, how old you are, and how far down the legal path the creditor is willing to go, as to whether you pension is safe or not.

ManyWays

There have been a few cases, some are summarised here:
https://england.shelter.org.uk/professional_resources/news_and_updates/pensions_and_enforcement_of_judgment_debts. In general these cases relate to very large amounts of money and follow a CCJ, often fraud or a protracted legal battle.

I dont think they are of any relevance for people trying to deal with typical consumer debt problems, such as an MBNA debt.