Whether a pension counts towards the asset limits is not addressed by the Act, the regulations or the Accountant in Bankruptcy’s guidance.

What the tests are

Section 2(2)(c) caps your total assets at £2,000 and section 2(2)(d) caps any single asset at £1,000, both measured on the date the application is made.

Neither subsection has been amended since 30 November 2016. Liabilities are left out of account, so it is a value test rather than an equity test.

Every source that could have answered this, and did not

The chapter that exists to tell advisers how to treat assets before an application is AiB’s guidance on assets, and its three headings are heritable property, vehicles and insurance policies.

The argument, and it is only an argument

Section 2(3)(a) says property is not to be regarded as an asset if it would be excluded from vesting in AiB as trustee.

So anything that does not vest arguably falls outside both tests. That is a reading of the provisions rather than a published rule, and no named source states it.

Treat it as a point to settle with your adviser before you apply. How assets are valued against the £2,000 limit sets out how little is published about valuation generally.

It keeps being paid to you. AiB Notes for Guidance 7.7 says payments received at the date of bankruptcy are classed as income which does not vest in the trustee.

Where that position comes from

AiB attributes it to a sheriff court ruling, Cook against the Accountant in Bankruptcy, decided in Glasgow in 2019. It is a first instance decision rather than binding authority for the whole of Scotland.

mygov.scot puts the same thing for the public: you can usually keep money you have put into a pension, but payments you are getting when you are made bankrupt usually count as income.

Income matters for the contribution, not for vesting

Section 90(1) requires a debtor contribution order in every sequestration, and section 90(4) allows the amount to be fixed at zero.

In a Minimal Asset Process it is nil, which is what AiB’s guide for MAP debtors says in terms. Whether you have to make payments during a MAP covers that in full.

The nil figure is not permanent

It reflects the assessment made at the time. Where AiB later assesses you as able to contribute, the case can stop being a Minimal Asset Process altogether.

It can end the Minimal Asset Process. AiB’s guidance says the trustee may seek a one-off contribution from a lump sum, and a lump sum can push your assets over the conversion figure.

Two triggers can fire at once

Paragraph 2 of Schedule 1 lets AiB consider ending the MAP modifications where total assets exceed a prescribed figure, or where it assesses you as able to make a contribution.

A lump sum can do both on the same day. Either one on its own is enough for AiB to act.

The figure is £2,000, not £5,000

Paragraph 2(5)(a) reads £5,000 on the face of the Act. Regulation 14 prescribes £2,000 in its place and has been unamended since 30 November 2016.

Anyone quoting the Act without the regulations gives you the wrong number. It is the commonest legislative trap in this subject.

What conversion actually changes

The automatic six-month discharge disappears rather than restarting. Discharge becomes a decision AiB may take at any time after twelve months from the original award.

A contribution order also becomes live, with a payment period of 48 months beginning with the first payment. Whether a MAP can be transferred to full administration sets out every consequence.

Unapproved personal pensions. AiB Notes for Guidance 7.7 says these continue to vest in the trustee, and it is the one real exception on the page.

Why an approved arrangement is outside the estate

Section 11(1) of the Welfare Reform and Pensions Act 1999 excludes rights under an approved pension arrangement from the estate.

Section 13(2)(a) reads the reference to a bankruptcy order as the award of sequestration, and it does not say who has to make the award. So it reaches an award made by the Accountant in Bankruptcy.

The two ways out that AiB names

The trustee may agree that an unapproved scheme will not vest where it is your sole or main pension. Alternatively you may apply to the court for an exclusion order.

AiB points to the Occupational and Personal Pension Schemes (Bankruptcy) Regulations 2002 for that court route. Neither option is automatic and both need to be raised early.

How each situation is treated

Check the category rather than assuming it

Whether your arrangement is approved decides which of these positions you are in, and the answer comes from your provider. Ask in writing before you apply.

The position in a longer sequestration is set out at what happens to your pension in sequestration, where a contribution order does far more work than it can in a MAP.

There is a provision aimed at excessive contributions. AiB’s guidance cites section 16 of the Welfare Reform and Pensions Act 1999, which lets a trustee seek a court order to recover them.

Which section, and why it matters

Section 16 is the Scottish provision in that part of the 1999 Act. Section 15 is the England and Wales equivalent and is the one commonly cited by mistake.

The route is an application to the court by the trustee. It is not something the trustee does by administrative decision.

What it is not aimed at

Ordinary monthly contributions out of wages are not the target. The provision is aimed at contributions that are excessive.

No percentage test appears in the Act or in AiB’s guidance. Pages that give a percentage of income as the threshold have invented it.

It can, because pension income feeds into the assessment on one of the two routes in. It is counted as income, not weighed as an asset.

The income route

Section 2(2)(a)(i) needs an assessment by the common financial tool that you have to make no contribution at all.

The prescribed tool is the Common Financial Statement, under regulation 15(1) of the Bankruptcy (Scotland) Regulations 2016.

Most sources name the Standard Financial Statement, which is the tool used elsewhere in the United Kingdom. Regulations that would have moved Scotland to it were drafted in 2018 and never made.

What AiB asks to see

The evidence checklist asks for evidence of works or private pension payments over the last three months, alongside the rest of your income evidence.

Notice what that tells you about AiB’s own approach. It asks about a pension as income and never asks for a pot to be valued.

The benefits route, and the state pension

The benefits route only works if those payments are your only income. Someone receiving universal credit alongside wages goes through the common financial tool assessment instead.

State pension credit is on the prescribed list of payments and the state pension itself is not. Whether universal credit qualifies you runs through the list and the condition attached to it.

Four things, and all of them are easier to fix before an application is signed than afterwards. None of them takes long.

The checks worth making

Timing is the part you control

If a lump sum or a first payment is due shortly, the date you apply changes the outcome. That is a conversation to have with your adviser rather than a rule to look up.

Reporting does not stop once the award is made. What happens if your income improves during a MAP covers the duty AiB places on you and what follows if you say nothing.

And check the rest of the entry conditions too

A pension is rarely the thing that defeats an application. Savings and policy surrender values are, and what happens to your savings in a MAP explains why.

Whether you are eligible for a MAP runs through all eight conditions in section 2(2), and what happens to a jointly owned asset covers the other question nobody has answered.