Welfare Reform and Pensions Bill

Welfare Reform and Pensions Bill - continued	House of Lords
PART III, PENSIONS: GENERAL - continued

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Pensions and bankruptcy

Effect of bankruptcy on pension rights: approved arrangements.

12. - (1) Where a bankruptcy order is made against a person on a petition presented after the coming into force of this section, any rights of his under an approved pension arrangement are excluded from his estate.

(2) In this section "approved pension arrangement" means-

(a) an exempt approved scheme;

(b) a relevant statutory scheme;

(c) a retirement benefits scheme set up by a government outside the United Kingdom for the benefit, or primarily for the benefit, of its employees;

(d) a retirement benefits scheme which is being considered for approval under Chapter I of Part XIV of the Taxes Act;

(e) a contract or scheme which is approved under Chapter III of that Part (retirement annuities);

(f) a personal pension scheme which is approved under Chapter IV of that Part;

(g) an annuity purchased for the purpose of giving effect to rights under a scheme falling within any of paragraphs (a) to (c) and (f);

(h) any pension arrangements of any description which may be prescribed by regulations made by the Secretary of State.

(3) The reference in subsection (1) to rights under an approved pension arrangement does not include rights under a personal pension scheme approved under Chapter IV of Part XIV of the Taxes Act unless those rights arise by virtue of approved personal pension arrangements.

(4) Subsection (5) applies if-

(a) at the time when a bankruptcy order is made against a person a retirement benefits scheme is being considered for approval under Chapter I of Part XIV of the Taxes Act, and

(b) the decision of the Commissioners of Inland Revenue is that approval is not to be given to the scheme.

(5) Any rights of that person under the scheme shall (without any conveyance, assignment or transfer) vest in his trustee in bankruptcy, as part of his estate, immediately on-

(a) the Commissioners' decision being made, or

(b) (if later) the trustee's appointment taking effect or, in the case of the official receiver, his becoming trustee.

(6) Subsection (7) applies if, at any time after a bankruptcy order is made against a person, the Commissioners of Inland Revenue give notice-

(a) withdrawing their approval under Chapter I of Part XIV of the Taxes Act from a retirement benefits scheme, or

(b) withdrawing their approval under Chapter IV of that Part from a personal pension scheme or from any approved personal pension arrangements,

and the date specified as being that from which the approval is withdrawn ("the withdrawal date") is a date not later than that on which the bankruptcy order is made.

(7) Any rights of that person under the scheme or arising by virtue of the arrangements, and any rights of his under any related annuity, shall (without any conveyance, assignment or transfer) vest in his trustee in bankruptcy, as part of his estate, immediately on-

(a) the giving of the notice, or

(b) (if later) the trustee's appointment taking effect or, in the case of the official receiver, his becoming trustee.

(8) In subsection (7) "related annuity" means an annuity purchased on or after the withdrawal date for the purpose of giving effect to rights under the scheme or (as the case may be) to rights arising by virtue of the arrangements.

(9) Where under subsection (5) or (7) any rights vest in a person's trustee in bankruptcy, the trustee's title to them has relation back to the commencement of the person's bankruptcy; but where any transaction is entered into by the trustees or managers of the scheme in question-

(a) in good faith, and

(b) without notice of the making of the decision mentioned in subsection (4)(b) or (as the case may be) the giving of the notice mentioned in subsection (6),

the trustee in bankruptcy is not in respect of that transaction entitled by virtue of this subsection to any remedy against them or any person whose title to any property derives from them.

(10) Without prejudice to section 78, regulations under subsection (2)(h) may, in the case of any description of arrangements prescribed by the regulations, make provision corresponding to any provision made by subsections (4) to (9).

(11) In this section-

(a) "exempt approved scheme", "relevant statutory scheme" and "retirement benefits scheme" have the same meaning as in Chapter I of Part XIV of the Taxes Act;

(b) "approved personal pension arrangements" and "personal pension scheme" have the same meaning as in Chapter IV of that Part;

(c) "estate", in relation to a person against whom a bankruptcy order is made, means his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986;

(d) "the Taxes Act" means the Income and Corporation Taxes Act 1988.

(12) For the purposes of this section a person shall be treated as having a right under an approved pension arrangement where-

(a) he is entitled to a credit under section 30(1)(b) as against the person responsible for the arrangement (within the meaning of Chapter I of Part V), and

(b) the person so responsible has not discharged his liability in respect of the credit.

Effect of bankruptcy on pension rights: unapproved arrangements.

13. - (1) The Secretary of State may by regulations make provision for or in connection with enabling rights of a person under an unapproved pension arrangement to be excluded, in the event of a bankruptcy order being made against that person, from his estate for the purposes of Parts VIII to XI of the Insolvency Act 1986.

(2) Regulations under this section may, in particular, make provision-

(a) for rights under an unapproved pension arrangement to be excluded from a person's estate-

(i) by an order made on his application by a prescribed court, or

(ii) in accordance with a qualifying agreement made between him and his trustee in bankruptcy;

(b) for the court's decision whether to make such an order in relation to a person to be made by reference to-

(i) future likely needs of him and his family, and

(ii) whether any benefits (by way of a pension or otherwise) are likely to be received by virtue of rights of his under other pension arrangements and (if so) the extent to which they appear likely to be adequate for meeting any such needs;

(c) for the prescribed persons in the case of any pension arrangement to provide a person or his trustee in bankruptcy on request with information reasonably required by that person or trustee for or in connection with the making of such applications and agreements as are mentioned in paragraph (a).

(3) In this section-

"prescribed" means prescribed by regulations under this section;

"qualifying agreement" means an agreement entered into in such circumstances, and satisfying such requirements, as may be prescribed;

"unapproved pension arrangement" means a pension arrangement which-

(a) is not an approved pension arrangement within the meaning of section 12, and

(b) is of a prescribed description.

(4) For the purposes of this section a person shall be treated as having a right under an unapproved pension arrangement where-

(a) he is entitled to a credit under section 30(1)(b) as against the person responsible for the arrangement (within the meaning of Chapter I of Part V), and

(b) the person so responsible has not discharged his liability in respect of the credit.

Sections 12 and 13: application to Scotland.

14. - (1) This section shall have effect for the purposes of the application of sections 12 and 13 to Scotland.

(2) A reference to-

(a) the making of a bankruptcy order against a person is a reference to the award of sequestration on his estate or the making of the appointment on his estate of a judicial factor under section 41 of the Solicitors (Scotland) Act 1980;

(b) the estate of a person is a reference to his estate for the purposes of the Bankruptcy (Scotland) Act 1985 or of the Solicitors (Scotland) Act 1980, as the case may be;

(d) a person's trustee in bankruptcy is a reference to his permanent trustee or judicial factor, as the case may be;

(e) the commencement of a person's bankruptcy is a reference to the date of sequestration (within the meaning of section 12(4) of the Bankruptcy (Scotland) Act 1985) or of the judicial factor's appointment taking effect, as the case may be.

(3) For paragraph (b) of each of subsections (5) and (7) of section 12 there shall be substituted-

"(b) if later, the date of sequestration (within the meaning of section 12(4) of the Bankruptcy (Scotland) Act 1985) or of the judicial factor's appointment taking effect, as the case may be."

No forfeiture on bankruptcy of rights under pension schemes.

15. - (1) In the Pension Schemes Act 1993, after section 159 there shall be inserted-

"No forfeiture on bankruptcy of rights under personal pension schemes.	159A. - (1) A person's rights under a personal pension scheme cannot be forfeited by reference to his bankruptcy.
	(2) For the purposes of this section-
	(a) a person shall be treated as having a right under a personal pension scheme where-
	(i) he is entitled to a credit under section 30(1)(b) of the Welfare Reform and Pensions Act 1999 (sharing of rights on divorce etc.),
	(ii) he is so entitled as against the person responsible for the scheme (within the meaning of Chapter I of Part V of that Act), and
	(iii) the person so responsible has not discharged his liability in respect of the credit; and
	(b) forfeiture shall be taken to include any manner of deprivation or suspension."

(2) In section 159(6) of that Act (application of section 159 to Scotland), after "this section" there shall be inserted "and section 159A".

(3) In section 92(2) of the Pensions Act 1995 (exceptions to the rule preventing forfeiture of rights under occupational pension schemes), paragraph (b) (which allows forfeiture of such rights by reference to a scheme member's bankruptcy) shall cease to have effect.

Prepared 15 October 1999