APPENDIX 3
Letter to Ms Gisela Stuart MP, from Mr
Nigel Griffiths MP, Parliamentary Under-Secretary of State
for Competition and Consumer Affairs (PS
24)
LANDAU CASE
SECTION 226 PENSIONS
You wrote to me on this issue and I promised
to get back to you. It is certainly the case that the Landau
ruling did confirm the long held view of The Insolvency Service
that retirement annuity contracts can be realised by the trustee
of a bankrupt's estate for the benefit of creditors. It is considered
that the effect of the judgment would also apply to personal pensions
held by bankrupts. This is in line with the general principles
of bankruptcy law. Most of a bankrupt's assets, including the
family home, if owned by the bankrupt, and personal savings, can
be realised by the trustee in bankruptcy. Personal pensions are,
in effect, a form of personal savings and are presently treated
in the same way.
The position with occupational pensions is different
in that they can, and almost invariably do, contain forfeiture
clauses which are designed to prevent the trustee in bankruptcy
being able to access the pension benefits. The effectiveness of
such clauses depends on the wording of the pension scheme documentation
and each case has to be looked at individually.
However, the Government does recognise the concerns
that you and others have expressed about the treatment of pensions
in bankruptcy. For this reason I agreed with my ministerial colleagues
responsible for pensions and social security matters that the
whole issue of pensions and bankruptcy should be considered in
the wide ranging review of pensions currently being undertaken
by the Department of Social Security. The outcome of that review
will be announced in due course.
27 July 1998
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