Court of Appeal rules debtor’s pension is protected from creditors

The Court of Appeal has overturned a 2023 High Court decision in Manolete v White [2024], ruling that courts cannot issue injunctions requiring members to draw down their occupational pensions to make them available to judgment creditors.

In 2023, Manolete had been successful in obtaining an order from the High Court under which solicitors would be authorised to exercise Mr White’s (the debtor’s) pension rights, receive his pension, and pay it to Manolete to discharge the judgment debt.

Section 91(2) Pensions Act 1995 prohibits the court from making an order “the effect of which would be that [a person] would be restrained from receiving” their occupational pension. 

To get around this, the High Court had made an order requiring Mr White to exercise his rights to draw down his pension, to receive that pension into a bank account in his own name, and to keep Manolete informed of the process (including providing advance details of the receiving bank account). 

Manolete then intended to enforce the judgment debt once Mr White had received his pension. It argued that this meant that the statutory prohibition had not been breached, because Mr White would in fact receive his pension, even if he might have to pay it on immediately.

The Court of Appeal disagreed and held that the injunction and notification provisions could not be looked at separately from the enforcement proceedings which they were intended to facilitate. When considered together, it could not be said that Mr White was actually receiving his pension. 

The Court of Appeal held that even if the order had not been expressly prohibited by the Pensions Act 1995, there was no justification for drafting an order for the purpose of evading a statutory provision.

In the past, the High Court has found on several occasions that debtors should not be allowed to hide their assets in pension funds when they have a right to withdraw funds to pay their creditors. Our briefing from December 2022,  “Hands off my pension! How safe are judgment debtors’ and bankrupts’ pensions from creditors?” examined cases where pension savers had been compelled to access their funds to satisfy debts.