Pension scheme refund?

Gmacbrew

I have recently been made redundant from Northern Rock (31st December 2008). When I originally joined in 2005 I was entered into the pension scheme. I subsequently filled out a opt out form in August 2007 which was under the two year opt out period. However, when contacting Northern Rock regarding this they have replied with the following:

You joined the Scheme on 1 SEP 05 and subsequently submitted an opt-out form on 24 AUG 07. You were opted-out of the Scheme from the next possible date, which was 1 SEP 07, and therefore have total pensionable service of 2 years. HM Revenue & Customs do not permit schemes to pay refunds of contributions to members with pensionable service of 2 years or more.

The opt-out form that you signed includes the following statement:

• If I have 2 years’ or more membership of the Scheme, my Personal Account will be held in the Scheme and will continue to accumulate investment returns until my retirement. If I leave Northern Rock, I will also be able to transfer the value of my Personal Account to another approved pension arrangement.

Now at the time of filling out the opt out form I was told this was fine and under the two years period, but now they are saying different. I think that 01 Sept 05 to 31 August 2007 should be the correct date and not 01 September 2007 am I right? I wish to have a refund of my own contributions which would be approx £750 and at this worrying time this would really help. Any suggestions?

Thanks

Graeme

MikeJones_2

Hi Graeme,

My immediate observation:

You knew that you had the right to opt-opt - but you may not have known or realised that the process involved an administrative procedure that meant your request would not be dealt with as at the date of your signing a form.

If you did know about it - or if your were given literature/contract stating this but you failed to read it, then the fault lies with you.

Your scheme/employer on the other hand may be culpable (in part or whole) if it has not communicated the process to employees and scheme members - i.e. something like - 'you have the right to opt-out of the pension scheme at any time within 2 years of joining. However, your right to opt-out must be made in writing no later than 23 months after joining, in order that your request may be dealt with in time.'

Do you know if the scheme is Trust based or Contract based? (I ask because if Trust based there will be a set of Scheme Rules which should clearly define this type of process).

In any event you can complain if you are not satisfied and invoke the Internal Dispute Resoltion Procedures (a 2-stage process).

If you get bogged down and you want help you can use The Pension Advisory Service for assistance who offer a FREE dispute resolution service (including helping you with the IDRP).

Hope that helps.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.