Surrender and forfeiture of pension benefits


Produced in partnership with Wyn Derbyshire of gunnercooke LLP
Practice notes

Surrender and forfeiture of pension benefits


Produced in partnership with Wyn Derbyshire of gunnercooke LLP

Practice notes
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THIS PRACTICE NOTE APPLIES TO OCCUPATIONAL PENSION SCHEMES ONLY

This Practice Note considers the extent to which accrued pension rights under registered occupational pension schemes can be surrendered or forfeited.

The general rule against surrender—the inalienability rule

Under section 91(1) of the Pensions Act 1995 (PA 1995), a person’s entitlement in respect of accrued benefit rights under a registered occupational pension scheme cannot be assigned, commuted, surrendered or charged, and no lien or set-off can be exercised in respect of it. Furthermore, any agreement to effect any such thing is unenforceable. This rule is known as the inalienability rule.

In circumstances where the inalienability rule applies, section 91(2) provides that no order can be made by any court that would restrain an individual from receiving their occupational pension. This was demonstrated in the case Manolete Partners Plc v White where the Court of Appeal overturned the High Court’s decision to approve an injunction order requiring a member to draw down their occupational pension scheme benefits and pay them over to a creditor. This was

Wyn Derbyshire
Wyn Derbyshire

Partner, gunnercooke LLP

Wyn is a partner at gunnercooke LLP and specialises in pensions, trust and employment law in all industry sectors, dealing with the transactional, advisory and documentation aspects.

He also has wide experience of the pensions implications of heavyweight corporate transactions and flotations, the issues arising from the establishment and merger of pension schemes, and sex equalisation and other discrimination issues in respect of benefits provided by pension schemes. In addition, he provides advice to pension scheme trustees generally.

Recent transactions include advising Amcor on pension matters relating to the acquisition of Alcan business and the acquisition of Northern Foods PLC by Boparan Holdings.

He is a co-author (with Stephen Hardy and Stephen Maffey) of TUPE: Law and Practice, published by Spiramus Press (now in its 4th edition), and co-author (with Stephen Hardy and David Wicks) of Money & Work, published by Spiramus Press in August 2007. He has also written several other books and numerous articles on a variety of legal and non-legal topics.

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Forfeiture definition
What does Forfeiture mean?

Forfeiture is the lost right to possession.

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