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Scottish Trust Deed Forum
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Topic starter
08/01/2016 3:06 pm
I've had quite a few free sector money advisers contact me in recent months seeking some guidance regarding pensions and whether they can be at risk in a Protected Trust Deed or a bankruptcy. This is coming off the back of the Pension law changes introduced by the UK government last year which made it much easier for a person to access some or all of the value of their pot, if they wish, from the age of 55. Understandably, those that are at or approaching that age are worried they could be forced to do this in order to repay the funds to their creditors.
The answer is that nothing has changed: Pensions specifically DO NOT vest in a Trustee as per the Bankruptcy Scotland Act 1985. The only exception to this is if a Trustee in Sequestration can successfully argue in court that someone has purposefully paid excessive amounts into their pension schemes specifically to keep them away from creditors. In practice, this kind of action is rare and only in exceptional cases.
The waters were muddied somewhat down South recently due to two court cases dealing with this issue. The judges in the respective cases actually came to different conclusions despite the facts of the 2 cases being very similar. In the first case the judge said a Trustee could force the debtor to draw down pension funds, in the second case the judge said the trustee could not. This latter case is now in the process of being appealed by the Trustee and the outcome is expected shortly. As the appeal is to a higher court, this will provide some much-needed clarity in England.
Importantly, Scottish law is different and even if the appeal down South is successful, it does not mean that it automatically translates to Scotland too.
Of course, it is a different matter if a person voluntarily chooses to draw a lump sum from their pension. Anyone thinking of doing so should exercise extreme caution ÔÇô not just because the value of your pension will be affected, but also because once it becomes cash in your bank then it is no longer pension funds and is an asset. For those in a Protected Trust Deed or Sequestration, or about to enter into one, that lump sum is likely to have to be handed over to your Trustee to be shared amongst your creditors.
Just thought I'd share in case it is of interest![:)]
Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.
08/01/2016 3:12 pm
aye kevin i thought that might be the case which in my own case means that i will not be able to get a lump sum from my pension pot the phrase "poisened chalice" comes to mind in the case of a trust deed
garry
Topic starter
08/01/2016 3:18 pm
Hi gavriel.
I hadn't actually seen your recent posts on your thread as I was writing this - obviously a bit of a coincidence.
Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.
08/01/2016 8:43 pm
Hypothetically of course.....how would your trustee know if you drew down your pension?
08/01/2016 8:55 pm
Lots of ways.
Bank statements at review for example.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
08/01/2016 9:04 pm
True.
If you put the cheque in that account for example.
09/01/2016 9:24 am
You think it appropriate to speculate about ways to act fraudulently here tinsoldier?
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
09/01/2016 1:55 pm
I'm not talking about anyone acting fraudulently at all.
09/01/2016 2:40 pm
To add - I'm sure Gavriel will make his own mind up about what to do. Perhaps if his trust deed company would communicate with his they can advise.
Look TDA I know your stance on here; you've made it crystal clear what you think of my PPI case on another thread and that's fine. I have my own views on what should and shouldn't happen post-discharge of a trustee and again that's fine. It would be a boring forum should we all agree with reach other.
Gavriel has possibly been paying into his pension for a long time, and feels that he should be able to draw some of it down. He obviously would be better keeping it where it is, but then the question is would a trustee seek re-appointment to gather it in if he draws it down post-discharge of both he and the trustee?
Not everything is black and white.
09/01/2016 3:34 pm
You've no idea what my stance is!
When people put forward opinions here I sometimes try to balance them with contrary viewpoints. Readers can then make up their own minds with the benefit of more than one viewpoint in mind. It doesn't mean that I sit on either side of a controversy.
Regarding the question you raise at the end of your post, it's reasonably black and white when you consider Kevin's post?
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
09/01/2016 4:00 pm
Whether a trustee would seek re-appointment to gather in the pension funds?
I thought Gavriel was still in his TD, sorry.
Topic starter
09/01/2016 5:40 pm
A trustee could only seek reappointment to gather in assets that vested in him, or should have been conveyed to him, during the term of the bankruptcy or protected Trust Deed. Pension pots do not fall into that category.
I can understand your cynicism, tinsoldier, and I'm glad you asked the question as others may well have been thinking the same.
Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.
