Pension Question - I'm confused!

hayley11

I have received a letter from my ex employer (I left there Dec 07 due to illness) In April they paid me £60 out of the blue, I assumed it was holiday pay or something and just spent it

A couple of months ago I received a letter saying that it was something to do with the pension...sorry I don't have the original letter. I rang him to discuss it and said I would try and pay £20 a month but due to illness etc we have been so skint, we're behind with our bills, debt payments etc so this just wasn't a priority to me.

Anyway I received another letter yesterday asking why I hadn't ever paid them and the letter said I had til the end of the month to pay in full or they would esculate it. (btw nice time to send a letter like that :rolleyes:)

Today I received another letter and this is what is confusing me...i'll put whats on the letter and if somebody could explain this to me i'd be very grateful

"I refer to my earlier letter regarding the overpayment and would like to suggest an alternative for you to consider.

Instead of returning the £57.51 overpayment, I would be willing to provide you with a deferred pension of £133.13 per annum based on your pensionable salary and service at date of leaving, in lieu of you returning the full £62.66 paid to you in April.

Due to the amount involved, this could be done over two months of sending me a cheque each month or two post dated cheques. The first one should be £30, with the final payment being £32.66. Once full payment has been made I will recalculate your benefits and issue the deferred pension statement.

You will then be sent an annual benefit statement showing the increase in your pension based on the Occupational Pensions (revaluation) Orders (i.e 5% p.a. or RPI if less)"

Soooo now it seems like I have to pay more than before, if only a few pound, I don't get it

Thanks in advance for any advice

hayley11

Nobody?

Debt_Free_Chick

We need to know more about the original overpayment but if you are entitled to a deferred pension, it cannot be reduced, if this is what they're proposing.

Can you explain what the amount paid to you was - there are two amounts referred to an "overpayment of £57.51" and "the full £62.66 paid to you in April"

Sorry, but the situation is not clear so could you set out the facts, please?

hayley11

Debt_Free_Chick wrote: »

We need to know more about the original overpayment but if you are entitled to a deferred pension, it cannot be reduced, if this is what they're proposing.

Can you explain what the amount paid to you was - there are two amounts referred to an "overpayment of £57.51" and "the full £62.66 paid to you in April"

Sorry, but the situation is not clear so could you set out the facts, please?

Thanks for your reply

I don't know what the original overpayment was for, but in the first letter he sent me last week it says "as these funds were paid from the pension schemes Trust arrangement, the overpayment must be returned."

With regards to the two payments, £62.66 was what they paid me in April but I don't know why the amount they asked for back was less.

Thanks

Debt_Free_Chick

Right - so they've paid you some money from the pension scheme. Were they supposed to pay you something which they now realise is too much? Or were they supposed to pay you nothing, but paid you in error?

hayley11

Debt_Free_Chick wrote: »

Right - so they've paid you some money from the pension scheme. Were they supposed to pay you something which they now realise is too much? Or were they supposed to pay you nothing, but paid you in error?

As far as I know they were supposed to be pay me nothing.

I worked for this company for approx. 7 months and during that time paid approx. £35 a month into the pension and then they obviously contributed something to it. I left due to ill health and to be honest I never even thought about the pension until this bloke started writing to me.

Oh I just thought of something, when I received the first letter off them, it included a form which was blank (sorry I don't know what the form was ) but in his letter it said please find enclosed your signed form. But I hadn't signed the form. Sorry this probably doesn't help at all.

I think I should maybe ring him and ask him to explain it all to me again. I was so ill when they paid me and when he first wrote to me so I just didn't take anything in.

jack_spratt_2

It used to be usual that a pension which had been paid for less than 2 years a return of contributions was one of the options available .
Was this a national company or a smaller company !!
What type of pension were you paying into ( a money purchase scheme with an insurance company or a defined benefit scheme run by your employer)
Things just do not seem to add up to be honest .

Could it be that you have had a refund of your contributions and that they have paid you to much !
If that is the case and times are hard try to agree a small repayment to them each month

hayley11

The company is Friends Provident. So they run the pension themselves as far as I know.

But in 7 months I would have paid £35 x 7 = £245 (roughly) So I don't see how they have overpaid me.

I will offer to pay it back once I understand what it's about but on my terms, originally he got me to agree to £20 a month but there's no way I can afford that at the moment.

I just wish i'd made some notes when I first spoke to him and then I'd actually remember what he said!

dzug1

I think I see one possible explanation. Pension contributions attract tax relief.
If they are refunded you have to pay back the tax relief. Maybe they made an error with this.
?

EdInvestor

If the scheme was contracted out, there would also be a deduction to pay NI to put the member back into the state 2nd pension.

hayley11

I've just tried to ring to ask him to explain it to me properly but the number on the letter doesn't work so I have sent him an email. I'll get as much info as possible from him.

Thanks for all your replies