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Since 2000 and the coming into force of the Welfare Reform and Pensions Act 1999 (WRPA 1999), a person's rights under a pension scheme can no longer be forfeited by reference to their bankruptcy. Basic state pension (and State Second Pension) rights do not form part of the bankruptcy estate. The same will generally be true in respect of statutory pension schemes for the benefit of certain categories of public sector employees. A trustee in bankruptcy may claim such pension entitlements by way of an income payments order (IPO) or income payments agreement, but only if the pension is already in drawdown and in the event that the bankrupt’s total revenue (including the pension income) exceeds their reasonable domestic needs (and those of his family).

Further, as a result of the changes made under the WRPA 1999, if a pension arrangement is an approved pension arrangement, it is excluded from the bankrupt’s estate. Note however that