Retirement as a component of bankruptcy estate
Insolvency is the assets which the insolvent had on the day of the declaration of bankruptcy and was acquired in the course of bankruptcy proceedings. The basic component of the bankruptcy estate is the salary for work, which was described in detail in the previous blog entry [Salary of the bankrupt as a component of the bankruptcy estate]. The equivalent of the salary for people no longer working because of age is the pension. Fallen pensioners should therefore bear in mind that in the event of bankruptcy, part of the pension income received by them will feed into the bankruptcy estate.
The extent to which the receiver has taken up the retirement pension
Just as in the case of salary for work, seizure of the pension by the receiver is not unlimited. From the point of view of a bankrupt consumer and an entrepreneur running a sole proprietorship, Article 63(1)(1) of the Insolvency Law is of key importance (in the case of a bankrupt consumer, in connection with Article 4912(1) of the Insolvency Law). This provision stipulates that property which is excluded from enforcement according to the provisions of the Act – the Code of Civil Procedure (hereinafter referred to as the Code of Civil Procedure) is not included in the bankruptcy estate.
Therefore, in the case of pensions, in order to determine the amount which will not enter the bankruptcy estate, it is necessary to refer to Article 833 § 1 of the Code of Civil Procedure and, consequently, to the relevant provisions of the Act of 17 December 1998 on pensions from the Social Insurance Fund (hereinafter referred to as the Act on e. and r. from FUS).
Pursuant to Art. 140 (1) (3) of the Act on e. and r. from FUS, the deduction from the pension made by the bankruptcy trustee may not exceed 25% of the pension benefit (gross amount). The higher amount (60%) will include the deduction for maintenance and (50%) for the payment for the stay in social welfare homes, nursing homes, nursing homes and nursing homes.
The second important factor, which the receiver should take into account when calculating the amount of pension rights entering the bankruptcy estate, is the amount free of deductions. On July 1, 2018, an amendment to Article 141 of the Act on e. and r. from FUS came into force, which introduces a quota (previously it was a percentage indication) for determining the amount free of deductions. In accordance with the transitional provision, new regulations apply to cases initiated and not completed before the date of entry into force of the above amendments. This means that the amendments will also apply to bankruptcy proceedings opened before 1 July 2018. Therefore, the amount free from deductions in the case of maintenance receivables is PLN 500, and in the case of receivables other than maintenance, the amount is PLN 825.
The limits of deductions are fixed for gross benefit
The limits of deductions are set for gross benefits, i.e. before deducting the monthly advance payment for personal income tax and health insurance premiums (Article 140 (7) of the Act on e. and r. from FUS). The above is deducted from the gross amount of the benefit only before deduction from the pension.
However, if, after deduction of health insurance premium and advance payments and other personal income tax receivables, the amount of benefit will be lower than the amount of benefit free of deductions and executions, deductions and executions will not be made.
Method of calculating the amount to be seized
As an example, currently (from 1 March 2018) the lowest gross pension amounts to PLN 1029.80. The amount free of deductions for receivables other than maintenance receivables (due to the changes from 1 July 2018) is PLN 825 (until 30 June 2018 it was PLN 772.35). The maximum amount of the deduction is PLN 257.45 (PLN 1029.80 * 25%). The net pension amount after deducting the amount for health insurance and advances for personal income tax is PLN 877.91. It means that the amount of PLN 52.91 will go to the bankruptcy estate.
In the case of the average national pension amounting to 2100 PLN gross, the maximum deduction will amount to 525 PLN. The amount of the net pension minus the amount for health insurance and advances for personal income tax is PLN 1742. The amount free of deductions for receivables other than maintenance amounts to PLN 825. If it is assumed that the bankrupt should only be entitled to the amount free of deductions (PLN 825), the amount of PLN 917 would be transferred to the bankruptcy estate. However, this amount is higher than the maximum withholding amount (PLN 525). This means that the maximum amount of PLN 525 will go to the bankruptcy estate.