Martin Jones: How is a pension treated in the event of bankruptcy?

Pensions and bankruptcy explained

clock • 3 min read

With the current dismal economic backdrop in mind, Martin Jones gives a reminder of how pensions are dealt with if the worst comes to the worst and a client finds themselves on the brink of bankruptcy...

Under current insolvency legislation, workplace and personal pensions are excluded from a bankrupt estate and cannot be claimed by a Trustee in Bankruptcy (TIB). This is on the proviso that the pension scheme is registered with HMRC (the vast majority of pension schemes are), with the state pension also being exempt. Therefore, a TIB cannot simply dip into a client's pension in order to repay their creditors. Exceptions to the rule That's not to say that a TIB does not have any avenues for recourse. If a client has made ‘excessive' contributions into their pension in the period bef...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

FCA/TPR value for money framework a 'key priority' for 2024/25

FCA/TPR value for money framework a 'key priority' for 2024/25

Regulatory duo first announced a plan for common measurements in 2022

Hope Coumbe
clock 10 May 2024 • 1 min read
NAO finds estimated cost of dashboards has risen £54m

NAO finds estimated cost of dashboards has risen £54m

'The DWP must learn lessons from what happened on this programme'

Holly Roach
clock 10 May 2024 • 3 min read
FCA urged to redesign pension dashboard rules to 'prioritise customers'

FCA urged to redesign pension dashboard rules to 'prioritise customers'

AJ Bell calls on regulator to redesign the rules

Isabel Baxter
clock 09 May 2024 • 2 min read