Pension contribution refund - trying to fleece me

angm_2

Hi All,

I have searched all resources i can and can't find any information.
My partner has not had an pension contributions paid into his scheme for the last 5 years because the NI Number was incorrect. The pension company have still been taking the contributions and have had them sat in one of their funds.

The penson company at first said that he was entitled to a full refund of £5,468.51 now they are saying he is only entitled to around £3000 as the tax relief will have to be paid back. I always thought tax relief was 20% which would mean he should get a refund of around £4300.

From what i can tell they are saying that if he re-invested the money into the pension then they wouldn't take off the tax relief.
I though that they wern't allowed to hold on to contributions with no NI Number and i also think they may be looking to pay back at the reduced invested amount rather than the net contributions. We contacted TPAS but they wern't that helpful.

Does anyone know of what rights we have with regard to this

Many Thanks
Angm

Debt_Free_Chick

I need to reformat these so it's easier to read

*****************************************************

Hi All,

I have searched all resources i can and can't find any information.
My partner has not had an pension contributions paid into his scheme for the last 5 years because the NI Number was incorrect. The pension company have still been taking the contributions and have had them sat in one of their funds.

The penson company at first said that he was entitled to a full refund of £5,468.51 now they are saying he is only entitled to around £3000 as the tax relief will have to be paid back. I always thought tax relief was 20% which would mean he should get a refund of around £4300.

From what i can tell they are saying that if he re-invested the money into the pension then they wouldn't take off the tax relief.

I though that they wern't allowed to hold on to contributions with no NI Number and i also think they may be looking to pay back at the reduced invested amount rather than the net contributions. We contacted TPAS but they wern't that helpful.

Does anyone know of what rights we have with regard to this

Many Thanks

Debt_Free_Chick

Debt_Free_Chick wrote: »

I need to reformat these so it's easier to read

*****************************************************

Hi All,

I have searched all resources i can and can't find any information.
My partner has not had an pension contributions paid into his scheme for the last 5 years because the NI Number was incorrect. The pension company have still been taking the contributions and have had them sat in one of their funds.

I assume this is a personal pension or a stakeholder pension?

The penson company at first said that he was entitled to a full refund of £5,468.51 now they are saying he is only entitled to around £3000 as the tax relief will have to be paid back.

Where have you got the figure of £5,468.51 from?

Is the value that's in the pension now?

What contributions did he actually pay?

I always thought tax relief was 20% which would mean he should get a refund of around £4300.

No. Tax relief is at the basic rate applicable to the year in which the contribution is paid. This year it's 20% - previously, it was at 22%. You will need to tell us the total contributions paid in each tax year, if you want us to "verify" the amount he's owed.

From what i can tell they are saying that if he re-invested the money into the pension then they wouldn't take off the tax relief.

That's right - if his contributions stay in a pension plan, the tax relief stays in a pension plan. If his contributions are refunded to him, the tax relief is refunded to the taxman (HMRC).

I though that they wern't allowed to hold on to contributions with no NI Number

They can, for a while - the NINO is largely used to verify your entitlement to take out a personal pension, so they will allow a certain amount of leeway/time for you to provide your NINO

and i also think they may be looking to pay back at the reduced invested amount rather than the net contributions.

Quite possibly they are - and it's quite possible that is all you're entitled to. With a personal pension you take the risk that the value of what you've put in falls.

We contacted TPAS but they wern't that helpful.

What exactly did they say? Did they suggest that you write in with a statement of facts and copies of all the paperwork?

Does anyone know of what rights we have with regard to this

Many Thanks

More information needed, please - in particular confirmation of the type of pension plan and the contributions paid.

Out of curiosity, why are you not just supplying the NINO to put things right?

dunstonh

Errors on NI are not uncommon and dont normally result in refunds. Just a correction on the NI number and some admin if there are protected rights involved.

angm_2

Hi,
Thanks for your reply.
The pension is a stake holder pension. we have now supplied the correct NI Number and the figure i put in there was the gross contributions. They did opriginally say we were entitled to a refund of the full amount but aren't now after checking with HMRC.
The problems i have with this whole thing is included in the two paragraphs extracted from an email sent from the pension company in which it states that after three months they should have refunded the premiums. Also in the paragraph below that they have said that their records must not show that the policy received contributions.
Also on talking to them, the money invested was not invested into the pension scheme and were sat in a holding account. If they were invested at all they were not invested into the funds that my partner informed them of when setting up the pension.

Policies set up prior to August 2002 that do not have a valid NINO cannot
accept premiums post-5 April 2004, the deadline date set by the Inland
Revenue. The letter also stated that if we did not receive notification of
your valid NINO within three months, we would have no option but to unpay
and refund all premiums received after 5 April 2004.

Unfortunately, our records must not show that your policy had received any
contributions after 5 April 2004 (until now, as you have confirmed your
correct NINO) as, if Inland Revenue - now, of course, known as HM Revenue &
Customs - performed an audit of such policies, we could not justify why we
held contributions during a period of time when their own legislation
confirms we should not hold any premiums for you.

Any advice is gratefully received

Many Thanks
Angm

Debt_Free_Chick

angm wrote: »

Hi,
Thanks for your reply.
The pension is a stake holder pension. we have now supplied the correct NI Number and the figure i put in there was the gross contributions. They did opriginally say we were entitled to a refund of the full amount but aren't now after checking with HMRC.

The rules are complex and HMRC tend to change them from time to time! This is not a terribly common situation and the person who first told you that you would get "the full refund" might not have realised the technical detail. So ... just a genuine mistake - it happens more often than it should, but the HMRC rules are very, very complex!

The problems i have with this whole thing is included in the two paragraphs extracted from an email sent from the pension company in which it states that after three months they should have refunded the premiums. Also in the paragraph below that they have said that their records must not show that the policy received contributions.

This is not my area of expertise, but I'm inclined to believe that they're right - now.

Also on talking to them, the money invested was not invested into the pension scheme and were sat in a holding account. If they were invested at all they were not invested into the funds that my partner informed them of when setting up the pension.

You might want to clarify what they mean by this. Usually, they buy the units in the investment funds, but can't credit them to his Stakeholder record. So the units were bought (i.e. the investments were bought), but the units are in a suspense account. Ask them to clarify this if it would help you to accept the situation.

Policies set up prior to August 2002 that do not have a valid NINO cannot accept premiums post-5 April 2004, the deadline date set by the Inland Revenue. The letter also stated that if we did not receive notification of your valid NINO within three months, we would have no option but to unpay and refund all premiums received after 5 April 2004.

Unfortunately, our records must not show that your policy had received any contributions after 5 April 2004 (until now, as you have confirmed your correct NINO) as, if Inland Revenue - now, of course, known as HM Revenue & Customs - performed an audit of such policies, we could not justify why we held contributions during a period of time when their own legislation confirms we should not hold any premiums for you

As a starting point, you will only get a refund of the net contributions you paid. Tax relief was not paid by you (partner) - it was paid to the pension provider by HMRC. So - your partner gets his share back and HMRC get their share back.

Assuming that they've bought the investment units, they now need to sell the units bought by the contributions paid after April 2004. They use that money to repay the tax relief to HMRC and your partner will then get what's left over - this could be less than the (net) contributions he actually paid. But that's the risk with investment funds - they can always be worth less than you invested.

As I work in pensions (and run a Stakeholder pension plan for our 1,000 employees), then what is being suggested looks right, to me. We've had to get some contributions refunded for a different reason and the process I've described above is what our provider did - and I checked it out with our advisers too.

So I don't think you're being fleeced at all. Your partner might not get back what he paid in, but that was the original deal he agreed to when he signed up for the plan. However, I hope you feel somewhat reassured that the process looks "about right" to me.

Regards