The High Court has declined to follow an earlier decision and ruled that a trustee in bankruptcy could not gain access to pensions benefits that were not already in payment.

Horton v Henry concerned an application by a trustee in bankruptcy for an income payments order (“IPO”) against Mr Henry’s pensions policies that had not yet vested. The bankrupt had refused to crystallise them. The trustee was seeking an order requiring the bankrupt to take his 25% lump sum from his self-invested personal pension, together with 36 monthly payments in flexible drawdown and the annuity value of his personal pensions. He also sought a right to apply for a variation of the IPO at a later date once the new pensions flexibilities are in place next year.

The earlier case of Raithatha v Wiliamson had decided that such an order could be made. Whilst the Raithatha decision has been widely criticised, it was never appealed as the parties reached settlement. However, the judge in Hortondeclined to follow Raithatha, finding that section 310 of the Insolvency Act 1986 did not provide a basis for an IPO in respect of an uncrystallised pension.

We are now faced with two conflicting cases at the same level, with resolution only possible by the Court of Appeal.