Pensions in payment were within the ambit of section 310(7) of the Insolvency Act 1986 (the "Act"), but pensions not in payment were not payments to which a bankrupt was “entitled” as the right to draw had not been excerised. The court therefore refused to make an income payments order ("IPO").
The bankrupt's assets included four pension policies. Even though he was entitled to withdraw his pension throughout his bankruptcy, he chose not to do so. On the day before his discharge from bankruptcy, his trustee in bankruptcy ("TiB") applied for an IPO seeking a share of the payments and income from the pension policies.
The court held that the bankrupt's undrawn pensions could not be subjected to an IPO. As the rights under the pension policies were uncrystallised and uncertain in value. The pension monies could not be considered within the ambit of section 310(7) of the Act. The TiB had no right, on behalf of the bankrupt, to make decisions and elections relating to the pensions as the pensions were not part of the estate.
The court considered the case of Raithatha v Williamson  EWHC 909 (Ch) but declined to follow it as they considered that it was wrongly decided. However, the case is being appealed and has a hearing window at the Court of Appeal of 14 May to 14 July 2015.