The position relating to pensions on bankruptcy has not always been entirely clear. Currently, in order for a pension scheme to qualify for Revenue approval, a pension under the scheme cannot be assigned or surrendered, save in certain limited circumstances. As a result, pension schemes often contain wording prohibiting assignment or surrender and, in certain cases, providing for the forfeiture of the benefit on a member’s bankruptcy. This in turn raised the question of whether or not a pension (not yet in payment) was capable of vesting in the Official Assignee in bankruptcy as part of the debtor’s property.
Part 4 of the Personal Insolvency Act 2012 which was commenced at the end of last year has introduced two new provisions into the Bankruptcy Act 1988 specifically relating to pensions on bankruptcy. Section 44A of the Bankruptcy Act now provides that assets under a relevant pension arrangement (other than payments already received or which the bankrupt was entitled to receive) shall not vest in the Official Assignee. A relevant pension arrangement is defined in the section and includes a retirement benefits scheme, retirement annuity contract, PRSA, overseas pension plan etc.