In December 2014, the High Court decided not to follow the earlier decision made in Raithatha v Williamson  EWHC 909 (Ch) (“Raithatha”).
Under section 11 of the Welfare Reform and Pensions Act 1999 a bankrupt's rights under an approved pension arrangement do not vest in the Trustee. However, section 11 did not confirm whether a Trustee may seek an IPO over income from a pension where the bankrupt had reached the age where he could receive payment from his pension but had chosen not to.
However, in the recent case of Horton v Henry  EWHC 4209 (Ch) (“Horton”) the High Court considered whether to make an IPO where the bankrupt had not elected to draw down his pension. The court acknowledged Raithatha could not be distinguished from this case but declined to follow the decision.
The court held that a bankrupt's unexercised rights to draw his pension did not represent income to which the bankrupt was entitled within the meaning of section 310(7) of the Insolvency Act 1986 and so refused to make an IPO.
The judge in Horton noted that hopefully the Court of Appeal will soon have an opportunity to rule on which of these cases is correct. Until further clarification is received, the two decisions leave the law in an unsatisfactory state and Trustees with uncertainty as to what action is appropriate to take in these circumstances.
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