Sometimes a debtor in the know can sit a little too smugly with cursory knowledge of section 11 of the Welfare Reform and Pensions Act 1999. This section states that where a Bankruptcy Order is made against a person on a Bankruptcy application or petition ... any rights under an approved pension arrangement are excluded from the estate, which otherwise passes to their Trustee.
This is further bolstered by those who have studied for their CPI or JIEB with NTI who will know of section 91 of the Pensions Act 1995, which provides that a person's rights under an occupational pension scheme cannot be assigned, charged, or set off ... blah, blah, blah.
We checked our records for any reference to Ian White, the sole director of Lloyds British Testing Limited which went into Administration in November 2016 and then celebrated the anniversary of this event one year later by going into CVL. We don't think Ian was a student of ours, so he might not have been aware of the level of detail about how much of his pension he could keep away from his Trustee in Bankruptcy. However - to enable you to get a more rounded view of Ian - he did, in the 20-month period prior to his company's Administration, make various payments out of company's assets for himself, including those towards a Bentley Flying Spur and a Bentley Continental, two Lamborghinis, a Porsche, foreign holidays in the Caribbean and the Maldives, his own home, the rent of his son's flat, substantial direct payments to himself (Bentleys and Lamborghinis don't fill themselves with fuel) and the cost and expenses of acquiring and operating a helicopter.
In a previous iteration of this case in a lower court it was found that White had, in fact, made various payments in breach of his fiduciary duties to the company and ordered him to pay a total judgment debt of £996,000 and change, payable within 14 days, by 8 September 2022. To date, White has not paid down any of this debt. This led to Manolete bringing an application to compel White to drawn down his benefits under an occupational pension scheme which had been financed by the company. Hence his argument: 'keep your hands off my pension'.
After considering various sub-sections of different statutes, and looked at fine precedent, such as that in the seminal case of Blight v Brewster, the court stated it was satisfied that Manolete had established that White had sufficient power to exercise the drawdown rights under the pension scheme rules. If this required White to take the prior step of asking for his fund to be designated as a “drawdown pension fund”, the court was satisfied that it had the necessary power under section 37(1) of the Senior Courts Act 1981 to require him to take this prior step. Section 37 provides that the High Court may grant an injunction, appoint a receiver or make any such order as it thinks just. So there.
Ultimately the court held it was not just, convenient, or equitable that White should be entitled to retain his pension, derived entirely from moneys provided by the company, whilst the judgment debt entered against him in favour of that company's assignee remained wholly unsatisfied. The court ordered him, a director, to draw down his pension benefits to satisfy a judgment debt.
In effect, the court emphasised the principle that debtors should not be allowed to hide assets away in a pension fund which they have a right to withdraw, and which are needed to pay creditors.
Kapow ... one for practitioners and exam students alike. The rights to retain a pension are not as black and white as they may have seemed.
If you want to take a look at this case for yourselves put Manolete Partners PLC v White into Google.