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Max Lowry
Max Lowry, Advocate
Category: Law
Satisfied Customers: 1457
Experience:  LLB, 10 years post qualification experience
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Hello. I have a pension fund tied up within a bankruptcy order

dated 1997. The official receiver... Show More
dated 1997. The official receiver has passed this case onto a solicitor firm to progress the draw down of this fund.
With the new legislation we should be able draw down the whole fund next April but the solicitor wants to take the 25% tax free lump sum now and an income for the next 5 years.
They say that if I don't agree to this they can take the whole fund next April.
What can I do?
Yours sincerely ***** *****
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Hi, welcome to the site. My name is ***** ***** I will help you with your question. Could you tell me please when you are entitled to draw down on the pension and/or take a 25% lump sum ? Also, do you have an annuity? Thanks
Customer reply replied 3 years ago.

Hi Max I am now 63 so I could of already taken the 25% but have not done so, and no there no annuity arrangement.

Ok and thank you for the additional information. Regrettably, this is a common situation with pre 2000 bankruptcies. The law pre May 2000 is I'm afraid clear. All rights under most pension policies which included private pensions (without a forfeiture clause) which were in existence at the date of the bankruptcy vested in their bankruptcy estate. This means the official receiver/ trustee could and can take the asset and use the funds realised for the benefit of creditors. All your rights which you had in respect of the pension at the date of bankruptcy would have vested in your trustee. The official receiver/trustee is entitled to take payments which the pension pays out. In fact, a recent case decision reinforced the position in the law whereby somebody who is entitled to draw down on a pension but decides not to do so can be compelled to let his/her trustee make the draw down which is to be used for the benefit of creditors.
I'm afraid in this situation your options are limited but in short the official receiver/trustee is entitled to do this.
Customer reply replied 3 years ago.

Thanks Max. I realise that the OR is able to take 25% plus income for 5years. However with George Osbourne announcement in this years budget all the fund can be drawn down. Does this mean that next April the OR can take 100%.

Yes. You are correct. The Lord Chancellors changes will mean the OR can go for the full amount next year. This so called "Lamborghini pensions" means that somebody can draw down the full amount of their pension if they want. This will allow OR's and trustees to ask for the full amount of the pension up to the level of monies owed to creditors.