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Your pension and bankruptcy

If you are made bankrupt, you lose control over any assets (property, shares, savings etc). These are sold or disposed of to help pay your bankruptcy debts by a person appointed to manage your bankruptcy. This person is called a ‘trustee’. Your pension might be an asset, so the pension itself and benefits or payments from it might be claimed by your trustee to pay to your bankruptcy debts.

Pension information you must provide

The benefits and rights you have in your pension will be examined to see if it they can be claimed to help pay your bankruptcy debts. Your trustee can ask for information about your pension, for example:

• the name of any pension schemes you and/or your employer have contributed to
  
• how much has been paid into it, particularly in the last two years
  
• how much you are receiving in payments from a pension
  
• how much you may have received from a pension as a lump sum

You must provide any information you are asked for. If you don’t co-operate, it may affect the date you can be discharged (freed) from your bankruptcy and lead to further court action.

State Pension and State Earnings Related Pensions

The following parts of your pension can’t be claimed to help pay your bankruptcy debts:

• your state pension
  
• any payments due to you from a State Earnings Related Pension Scheme (SERPS)
  
• any protected rights – the equivalent of SERPS if you contracted out of it

• Types of pensions (pensions and retirement planning section)

• State Earnings Related Pension Scheme (pensions and retirement planning section)

Other types of pension

Any other types of pension, benefits or rights might be claimed. However, this depends on when your bankruptcy petition (application) was made and if your pension scheme is approved by HM Revenue and Customs (HMRC). Your trustee or Official Receiver can confirm if your pension scheme is HMRC approved.

If your bankruptcy petition was dated on or after 29 May 2023 and your pension is approved by HMRC, it is not an asset. This means your trustee can’t make a claim on your pension. However, your trustee can claim any benefits you are receiving or will receive, including a lump sum, before you are discharged (freed) from bankruptcy.

If your bankruptcy petition was dated before 29 May 2000, or is not approved by HMRC, your pension is an asset. Any lump sum and regular payments due to you can be claimed by your trustee. They can be claimed when you reach the earliest retirement age allowed by your policy. This can happen even if your pension is payable many years after you were discharged (freed) from bankruptcy.

• Contact your local Official Receiver

If your pension can be claimed

If your pension can be claimed as an asset, lump sums or regular payments due to you when you reach the earliest retirement age allowed by your policy can be claimed. This date can be some time after you have been discharged (freed) from your bankruptcy.

Your options to protect your pension if it is claimed as an asset

You might be able to protect your pension by:

• applying to the court for an exclusion order
  
• coming to an agreement with your trustee
  
• buying back your interest in the pension policy from the trustee

You should get independent advice or talk to your trustee or Official Receiver about the options to protect your pension.

Occupational pension schemes

Some occupational pension policies have a ‘forfeiture clause’. This clause means that you automatically lose any rights and benefits to the pension if you are made bankrupt. If this happens, your trustee can’t make a claim on this pension. Your trustee will investigate the forfeiture clause to see if it has to be applied.

• Choosing and using a financial adviser

• Contact your local Official Receiver

If you are already receiving pension payments

If you are already receiving payments from a pension, your trustee will consider this money to be a part of your income. When you are made bankrupt, your income can sometimes be used to help pay your bankruptcy debts, but only if you can afford to do so.

You can agree to make a contribution from your income to your debts (using an Income Payments Agreement) or the court can order you to (issuing an Income Payments Order). Both arrangements last for three years.

• Bankruptcy - how your debts are paid

Future contributions to your pension

You are allowed to make contributions to your pension even while you are bankrupt. However, get independent advice or speak to your pension provider. You should also contact you trustee, as any spare income you have might be needed to pay your bankruptcy debts.

More useful links

Useful contacts

• Money, tax and benefits contacts