The High Court has recently ruled
that untouched private pension pots of undischarged bankrupts can be used to
pay off creditors.
Bernard Livesey QC judged that
pensions of bankrupts yet to be accessed should no longer be off limit to a
Trustee in Bankruptcy.
“Why should it be that a person
who elected on the day proceeding his bankruptcy should be in a position where
his entitlement to enjoy the fruits of his pension is liable to be subject to
right of the trustee to apply for it to go to his creditors … whereas the
person who had not yet done so is immune from the impact of the section and can
enjoy the full fruits of his pension to the detriment of his creditors?”.
This case follows a Trustee who
brought an application to force an undischarged bankrupt to draw his pension
which he was eligible to do.
This judgement, which is subject
to appeal, may have some far reaching consequences. We need to bear in mind
that we need entrepreneurs to get this country bank on its feet. Many of these
people will be sole traders and may not have been particularly well advised
before they start out. The difference between such a person and one who take
limited liability protection can have a massive effect if the business fails. For
a great many, by the time they have decided to take the leap to set up their
own business, they have accumulated a pension pot from previous employers. Why
should they have to release this at a later date having fuelled the economy for
a number of years in order the send the majority of this cash back to the
creditors?
The whole question of risk and
benefit needs to be taken into account when framing the law in this area.
I suspect there will be much more on this particular
subject…
written by Tim Corfield
