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  • FIRST POST
    • maxemoo
    • By maxemoo 12th Apr 18, 6:33 PM
    • 2Posts
    • 0Thanks
    maxemoo
    Bankruptcy 18 years ago
    • #1
    • 12th Apr 18, 6:33 PM
    Bankruptcy 18 years ago 12th Apr 18 at 6:33 PM
    A friend of mine was made bankrupt 18 years ago.
    He passed away 5 months ago, without making a will and his family are in the process of trying to sort out a works pension he had.
    The family have contacted the company the works pension is now with and they are now saying that, because he was made bankrupt 18 years ago, they cannot release all the money to the family, a percentage of it will be kept by the pension company - something to do with the creditors and the bankruptcy.
    With what I have read online, I thought that anything to do with a bankruptcy was all over and done with after 6 years.

    Can the company that the pension is now with withhold this money?
Page 1
    • TheGardener
    • By TheGardener 12th Apr 18, 8:56 PM
    • 2,277 Posts
    • 2,169 Thanks
    TheGardener
    • #2
    • 12th Apr 18, 8:56 PM
    • #2
    • 12th Apr 18, 8:56 PM
    The six years is how long a BR stays on a credit file. You don't say if your friend was automatically discharged after a year ? That would be the norm but there are some factors that might have extended the BR.

    Read this - as the BR was so long ago you may find some issues but you need professional advice on this as it is a complex area
    https://debtcamel.co.uk/pension-safe-bankrupt/
    • debt doctor
    • By debt doctor 12th Apr 18, 9:41 PM
    • 4,240 Posts
    • 5,913 Thanks
    debt doctor
    • #3
    • 12th Apr 18, 9:41 PM
    • #3
    • 12th Apr 18, 9:41 PM
    Hi,

    Was this bankruptcy declared before or after May 29th 2000 - This is a very important clarification.

    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
    • maxemoo
    • By maxemoo 12th Apr 18, 11:17 PM
    • 2 Posts
    • 0 Thanks
    maxemoo
    • #4
    • 12th Apr 18, 11:17 PM
    • #4
    • 12th Apr 18, 11:17 PM
    It was before May 2000.
    • debt doctor
    • By debt doctor 13th Apr 18, 12:17 PM
    • 4,240 Posts
    • 5,913 Thanks
    debt doctor
    • #5
    • 13th Apr 18, 12:17 PM
    • #5
    • 13th Apr 18, 12:17 PM
    Apologies for all the light reading below, but it is all relevant:

    Part 2: Pensions in cases where the bankruptcy petition was presented before 29 May 2000
    Part 2: Pensions in cases where the bankruptcy petition was presented before 29 May 2000

    September 2013

    The following information applies only to cases where the bankruptcy petition was presented before 29 May 2000.

    When a bankrupt/former bankrupt is entitled to pension benefits and the bankruptcy petition was presented before 29 May 2000, or where a case with an unrealised vesting pension is handed back by an IP trustee, the case should be passed to the LTADT Pensions Team in line with the following guidance:

    The pension details should be recorded on ISCIS as an asset.
    The official receiver should request the case and court files and copy from these all relevant documents including as a minimum the bankruptcy order and creditor details.
    If neither the court or case file is available the following note should be added to the asset tab !!!8216;Court and OR file requested but no longer available!!!8217;.
    All relevant documents from the case/court file, including details of the former bankrupt and/or the pension company should be scanned as a single PDF document and uploaded to the asset documents tab on ISCIS.
    The asset tab should have a note added to confirm how the pension has come to light and confirm that all relevant and available documents have been up loaded.
    The case should then be transferred to the LTADT Pensions Team.
    1) Types of pension

    The bankrupt may be in receipt of, or at some future date will receive, lump sums and regular payments from a variety of pension arrangements. In some cases these benefits or rights will vest in the bankrupt!!!8217;s trustee who will have to decide how to deal with them. Where the pension rights and benefits vest, the trustee has no better title to the asset than the bankrupt. In practice this means that the trustee must wait until the bankrupt reaches the earliest retirement date under the terms of the scheme before any benefits can be realized. As the benefits vest, realization can take place after the bankrupt has been discharged. There are three main categories of pension provision for an individual:

    State pensions - see paragraph ii
    Occupational pensions - see paragraph iii
    Personal pensions - see paragraph vii
    2) State pensions

    Almost all bankrupts will be entitled to receive a state pension on reaching the state pension age (which is currently 65 for men and 60 for women - women's state pension age will start to change to 65 gradually from 2010 - see thepensionservice.gov.uk/.../) State pensions, like other state benefits and allowances, do not form part of the bankrupt!!!8217;s estate.

    If a bankrupt is undischarged (which is unlikely in pre WRPA cases) and is in receipt of a state pension, payments can be included in any calculation for an income payments agreement or income payments order. The official receiver should only consider accepting an income payments agreement or applying for an income payments order where the bankrupt's sole or main income is from a state pension in exceptional circumstances. (See CHM part Income Payments Agreements and Income Payments Orders for guidance concerning income payments agreements and income payments orders).

    3) Occupational pension schemes

    An occupational pension scheme is a pension scheme generated by a company or organization for the benefit of its employees. Upon the making of a bankruptcy order, the bankrupt!!!8217;s right to receive a pension from an occupational pension scheme (subject to the validity of any forfeiture clause !!!8211; see Technical Manual paragraph 61.65) form part of the bankrupt!!!8217;s estate.

    The bankrupt!!!8217;s rights under an occupational pension scheme can be divided into three categories:

    Received or current rights - where the bankrupt is in receipt of pension payments. These rights vest in the trustee.
    Accrued or contingent rights - where the bankrupt has not yet reached pensionable age but has contributions stored in an occupational scheme. These rights also vest in the trustee.
    Future rights - the rights a bankrupt will accumulate through continued contribution to an occupational scheme post bankruptcy. These rights do not vest in the trustee.
    Between the date of the bankruptcy order and the date of discharge it is possible to claim contributions made to the scheme as after acquired property. However, a claim would have to be made within 42 days of each and every contribution. It is not recommended that the official receiver claims future rights in this way

    4) Forfeiture clauses in occupational pension schemes

    Some pension schemes seek to prevent the benefits being collected by the trustee by means of a clause inserted in the scheme. These clauses are normally well constructed in occupational schemes and the trustee will not usually seek to challenge their validity unless the clause was added to the scheme rules after the date of the bankruptcy order. The pension in a scheme with a valid clause may not be treated as an asset in the bankruptcy.

    5) What is a valid forfeiture clause?

    A forfeiture clause that states specifically that any pension rights will be forfeit on the making of a bankruptcy order against a member is valid and the official receiver/trustee should not seek to challenge it (provided it was introduced into the scheme rules before the date of the bankruptcy order). However, a general clause which states only that pension rights and benefits will be forfeit on an attempt to assign those rights can be challenged by the official receiver as there is no assignment of property on bankruptcy, the property vesting in the trustee without the need for assignment under s 306(2) of the Insolvency Act 1986.

    Public sector schemes, which are established and governed by specific Acts of Parliament peculiar to each of them, may contain a statutory provision to prevent the benefits vesting in the trustee although this does not include the schemes set up for the Armed Forces or the Civil Service, which do not contain a valid forfeiture clause. However, if the benefits were awarded to the recipient under the Naval, Military and Air Forces Etc (Disablement and Death) Services Pensions Order 1993 because he/she was injured on active service, the official receiver should not claim the award.

    Generally, a forfeiture clause will operate so that a member of the pension scheme will forego all benefits that would have been available to them under the scheme and it will then be up to the trustees of the scheme to deal with those benefits as they see fit, for example, by passing the benefits onto the member!!!8217;s dependants.

    Once the official receiver becomes aware that the bankrupt is a member of an occupational pension scheme with a valid forfeiture clause, he/she should not seek to claim the benefits. For example, the pension schemes for the National Health Service and BT are covered by a valid forfeiture clause and will not vest.

    6) Occupational pension schemes with no valid forfeiture clause

    Where the scheme does not have a valid forfeiture clause the official receiver will have notified the bankrupt that the scheme may vest in the trustee and will have obtained further details of the scheme from the pension provider which should be passed on to the LTADT (following the instruction in the introduction above).

    If the scheme consists of protected rights only, the official receiver has no claim over the scheme and the bankrupt and the trustees of the pension scheme should be notified accordingly. When the pension comes into payment, if the pension scheme trustees try to rely on a forfeiture clause, the LTADT will make a decision regarding the validity of the clause.

    Where the clause is deemed to be valid, the bankrupt and the trustees of the pension scheme should be informed that the official receiver/trustee will have no interest in the scheme.

    Where there is no valid clause, the bankrupt and the pension scheme trustees should be notified that the pension vested in the bankruptcy estate when the bankruptcy order was made.

    7) Personal pension policies

    A personal pension plan is an investment policy designed to offer a lump sum in retirement. Plans are available to any UK resident under 75 years old and can be bought from insurance companies, high street banks, investment organizations and some retailers.

    Personal pension plans are money purchase arrangements. This means that a member contributes to the plan, the money is invested and a fund is built up. The amount of pension payable depends on the amount paid in, how the investment funds perform and the annuity rate.

    The policyholder can elect when the benefits become payable which will usually be some time between ages 50 (From 2010 this rises to 55) and 70, although policies which were taken out before 1988 (described as retirement annuity contracts or RACs) only allow 60 as the earliest retirement age.

    In those cases where the bankruptcy petition was presented prior to 29 May 2000, all personal pension policies, with the exception of protected rights, vest in the trustee in bankruptcy following the decisions in Re Landau (a bankrupt) (1997) 3 All ER and Lesser v Lawrence and Denison v Krasner (2000) BPIR 410.

    8) What are protected rights?

    Protected rights arise where the bankrupt has opted out of an employer!!!8217;s occupational pension scheme and contracted out of the state second pension S2P (formerly SERPS), and has replaced them with a personal pension. That personal pension policy in which the bankrupt has invested funds will attract protected rights to the same level as the S2P would and are treated in the same manner so, accordingly, do not vest in the trustee.

    If a bankrupt!!!8217;s personal pension consists exclusively of protected rights, the official receiver/trustee will not be able to realize the pension and the policy document should be returned to the bankrupt. If the policy only consists of part protected rights, the official receiver should note which portion of the fund does not vest in the trustee and will thus be available to the bankrupt at the appropriate pensionable age.

    If the policy has no protected rights, the official receiver should make the bankrupt aware of this so that he/she can seek independent financial advice on the options available which may include setting up a new pension. The official receiver must not advise the bankrupt to stop paying into the existing policy.

    ************************************************** ********

    My very short summary is that you appear to be talking about an occupational pension. A pension at that time vested in the trustee (Became the property of the trustee) up to and including the value of the pot at the time of the bankruptcy UNLESS a clause existed that did not allow this to happen.
    In any event, the accumulation of monies after the bankruptcy do not vest in the trustee.
    You need to find out what the pension policy / rules said in 2000 about a member becoming bankrupt.

    Also, put the ball in the pension companies court - Ask them to demonstrate and prove to to you under what rules and which laws they are refusing to pass over some or all of the monies.

    You will note from the above that it is a very complex business.

    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
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