Help, ex CS pension query

Ms-Pacman

Situation is I was on a fix term contract as a Civil Sefvant which was for less than 2 years. A pension was auto taken out of my pay for just under £45 with first monthly pay received in March 07. As i felt should start paying into the pension scheme I left it in there.

Now 18 months later fixed term ended which I knew would happen (at same place but as a contractor, (non civil service) so I have had the letter advising pension to be refunded or can transfer as not eligible for pension to be preserved for payment as worked for less than 2 years.

Now I knew and they also knew at the time that my contract would not exceed the two years at the time due to fixed term t&c. So I don't understant why they have let me pay something I would bnever be entitled for.

They have given me a balance for a refund so far which is
Gross contributions refund amount £669.81
(this is the total I have paid to date not including any contribution they made)

Less member share of CEP £217.29
Less deduction for income tax £90.50
Net refund to be apid £362.02

It just seems a huge cut in the amount I paid for something Id never be entitled to and I just think this is unfair.

I know it would have been taxed anyway if paid out in wages instead of pension but would it really have been this much?

The pension people are not interested and said I would have received a pack explaining this but to be honest I don't remeber this. I;m sure if I had been told you would not be entitled to the preserved payment then I would not have bothered paying into it as I am kind of like that when it comes to saving unfortunately!

dunstonh

Now I knew and they also knew at the time that my contract would not exceed the two years at the time due to fixed term t&c. So I don't understant why they have let me pay something I would bnever be entitled for.

Because the contract "may" have been extended. Plus they are required by the rules of the scheme to make it available to you.

And if you transfer it you still get the benefit of what is accrued to date, albeit in a transfer value.

You could also have said no to joining. They gave you the choice.

Gross contributions refund amount £669.81
(this is the total I have paid to date not including any contribution they made)

Less member share of CEP £217.29
Less deduction for income tax £90.50
Net refund to be apid £362.02

It just seems a huge cut in the amount I paid for something Id never be entitled to and I just think this is unfair.

It adds up and is correct. You paid less NI and income tax so if you want your money back you have to pay the HMRC what you would have paid.

The pension people are not interested and said I would have received a pack explaining this but to be honest I don't remeber this.

With respect, you would have got it but probably chose to not bother reading it.

I;m sure if I had been told you would not be entitled to the preserved payment then I would not have bothered paying into it as I am kind of like that when it comes to saving unfortunately!

You wouldnt have been told and there is no requirement for them to tell you. That liability lies with your independent financial adviser, if you have one, or yourself if you read the booklet that tells you about the scheme.

Rather than take the money back, why not transfer it?

Ms-Pacman

dunstonh wrote: »

Because the contract "may" have been extended. Plus they are required by the rules of the scheme to make it available to you.
The department I work for knew very well that the fixed term would not be extended after the two years but my contract was for less than that anyway. They were very specific about that in the introduction welcome letter I was sent.

And if you transfer it you still get the benefit of what is accrued to date, albeit in a transfer value.
Yes, I'll look into that as will continue paying into a pension as I can afford to

You could also have said no to joining. They gave you the choice.
I know I had the choice, but I didn't realise I would have to go through the hassle of transfering or refunding it either as not being entitled to keep it there. A member of their staff has already told me I should not have been on this particular plan.


It adds up and is correct. You paid less NI and income tax so if you want your money back you have to pay the HMRC what you would have paid.
Of course I have to pay tax but I don't know how much that would have been as don't have that figure. I expected that to be deducted when they paid the refund which does say the refund may be less than the balance given. From what they explained to me that figure given in the refund letter is the charge for having this service or am i wrong here?
Or is that in fact the tax then? Is that what you mean as that wasn't clear from the letter they sent me.


With respect, you would have got it but probably chose to not bother reading it.
No, I do read stuff, for example spent most of last thursday reading all the stuff from my new contract and yes the pension stuff is there too which I have read and decided to choose an independant one instead.
I have looked through all my Civil Servant contract stuff and there doesnt appear to be anything, just a brief few lines in my welcome letter from the department I worked for.


You wouldnt have been told and there is no requirement for them to tell you. That liability lies with your independent financial adviser, if you have one, or yourself if you read the booklet that tells you about the scheme.
They explained that it was auto set up and would be up to me to cancel which is fair enough. I can understand why but I don't understand why no one including HR told me that I would not be able to keep my pension with them. I would have cancelled had I known and got an independant one which I was looking into at the time anyway. The contribution from them was high and this is why I decided to go ahead not knwoing what I found out now.

Rather than take the money back, why not transfer it?

Yes, looking into this now.

Thanks for your reply.

CAE

Automatic entry to the pension scheme is probably mandatory, with the option to opt out. One of the reasons would be the not insignificant amount that would have been paid out in the event of your death whilst in employment and in the pension scheme.

Tax at the rate of 20% is deducted from any refund of pension contributions. This is lower than the normal rate of income tax, although it is not actually income tax.