At a glance
If you are thinking about bankruptcy, or have been made bankrupt, then the good news is: your pension is not classed as an asset. This means you are protected against any claim on your pension savings made by the official receiver (sometimes known as the trustee in bankruptcy).
However, as with most things pension related, there are a lot of ifs, buts and maybes that you need to consider. Knowing where you stand when it comes to bankruptcy and your pension can mean a much-needed slice of reassurance and peace of mind during what can be a very challenging time.
Can my pension affect a bankruptcy application?
What if I don’t declare my pension savings when applying for bankruptcy?During your application for bankruptcy you are asked to declare you pension savings, and it makes sense to do so. If you don’t and the official receiver later discovers that you could have used pension savings to clear your debt, your bankruptcy arrangement could be annulled.
What happens if I am declared bankrupt and taking a pension income?
What happens if I am paying into a workplace pension?
Can money be taken from my pension during bankruptcy?
This is where the ifs and buts creep in. There are two main scenarios where money could be claimed from your pension as part of a bankruptcy arrangement.
Excessive pension contributions
If you pay a lot of money into your pension in the period leading up to your bankruptcy, the official receiver could choose to take this money back out of your pot to help cover your debts. While this is a judgement call on the part of the receiver, pension contributions of more than 15% of your income could be deemed excessive.
Your pension must be registered with HMRC for it to count as an approved scheme. If your scheme is not registered, then the savings in it will not be protected in the event you are declared bankrupt.