Pension lump sum seized by trustee in bankruptcy


A recent Court case highlighted that your pension fund may not be protected from your creditors after all, writes Bevan & Buckland debt advice specialist, Alun Evans.

In April 2012 the High Court held that where a bankrupt has a personal pension and is at least 55 Years of age (and so entitled to take the benefits), the Court may make an income payments order requiring him to take both the lump sum and the annual income and to pass this on to his Trustee in Bankruptcy for the benefit of his creditors. (Raithatha v Williamson (2012) EWHC 909 Ch).

In this particular case Mr Williamson had a pension policy valued at £1m.  He was nearly 60 years of age and because he was still in work he had not drawn down his pension funds.

The judgement is a surprise as most Trustees in Bankruptcy had assumed that the law was well established under Section 11 Welfare Reform and Pensions Act 1999 which states that a pension cannot be seized if you become insolvent.

However, in this case the Judge referred to Section 310 Insolvency Act 1986.  This section specifically defines income as including any payment under a pension scheme’.

This case is expected to be appealed.

Advice for individuals with financial difficulties

It is suggested that if a person has a significant pension fund it may be beneficial to delay petitioning for bankruptcy until the appeal has been heard and certainty is obtained.  At the moment any individual who is a subject of the bankruptcy order (post April 2012) risks losing their personal pension fund.


Alun Evans is the partner at Bevan & Buckland’s Haverfordwest office specialising mainly in accounts, tax, debt and insolvency.  Alun is happy to meet for advice in any of our offices – Cardiff, Carmarthen, Haverfordwest, Pembroke, St Davids and Swansea.

Alun is a chartered accountant and licensed insolvency practitioner and a member of the ICAEW Tax Faculty.

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383


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