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The long awaited decision in Horton –v- Henry has been handed down by the Court of Appeal.

It has long been the case that pension payments already being received by a bankrupt could be the subject of an income payments order (IPO). The principal issue to be determined in this case was whether an entitlement to a pension payment which has not yet been exercised can be included in an assessment of income for an IPO. In 2014 the High Court held that undrawn pensions were not funds to which a bankrupt was entitled, so could not be made subject to an IPO.

The Court of Appeal has held that decision, stating that only where an occupational pension is actually in payment can a trustee apply for an IPO based on the income from that pension.

For many people, their pension pot is one of their most substantial assets and the one on which they rely to fund their later years. Successive governments have encouraged workers to save for their retirement by giving tax incentives and simplifying the pensions system. Now that it is possible to obtain pension benefits from the age of 55 this is often a substantial income that can be obtained at a relatively early age.

We have seen a number of cases where decisions regarding bankruptcy have been delayed pending this judgment. Bankrupts will no doubt welcome the decision, which safeguards their untaken pensions from their trustees in bankruptcy.