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Income Payments Orders & Pensions – A Recent Case

The recent case of Hinton v Wotherspoon [2016] EWHC 621 (CH) offers little encouragement for trustees in bankruptcy hoping to recover unelected pension entitlements.

Background

The trustee in bankruptcy applied for an Income Payments Order (IPO) relating to a bankrupt’s self-invested personal pension (SIPP).  However, after the hearing of the application and the day before judgment was to be given, it was discovered  that the SIPP was a capped drawdown scheme.

Consequently, this would affect the amount of income the bankrupt would be able to withdraw at any one time, and have an impact upon the estate.  This also raised the issue of the availability of sufficient funds for the bankrupt  and his family’s reasonable domestic needs.

The Registrar was compelled to reconsider his judgment.

The Registrar followed Re Henry, the most recent of two inconsistent High Court decisions (the earlier decision being that of Raithatha v Williamson) and held that a bankrupt could not be forced to elect in respect of his/her pension entitlements.

However he concluded that as the bankrupt had elected to take entitlements, the entitlements together with his income resulted in his being able to make a contribution.

This case suggests that the Court will not issue an IPO in respect of a bankrupt’s unelected pension entitlements.

Posted on July 27, 2016

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