Ever heard about being/been undercontributed in one's occupational pension scheme?

aristote33

Calling to:

- all employees contributing into a company pension scheme provided by their employer (also known as occupational pension scheme).

Have you ever noticed being undercontributed by your company? (Might be worth checking if you have never paid too much attention to the matter)



- all employees administering pension occupational pension contributions in their company.

Have you ever been given more or less clear instructions so that employees who are active members of your company's occupational pension scheme undercontribute so that it consequently cuts the financial commitment (ie. burden) of your company in contributing on top of employee's contributions?


- everybody on MSE.

Have you ever heard in a close or more distant past of occupational pension scams where employees have been undercontributed to their occupational pension scheme?

Thank you.

MikeJones_2

Hi aristote33,

Are you referring to defined benefit schemes, money purchase occupational pension schemes or both?

And when you say 'undercontribute' do you mean that the active members of the scheme have been paying less into the scheme than they should have been?

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.

aristote33

Thanks for your interest in my questions, MikeJones.

Wasn't thinking of any specific pension scheme in particular, so I would answer "both".

Main concern would be that companies try to minimize their financial commitment in pensions employer's contributions by undercontributing their emmployees' contributions (rationale being: if the employee contribution is smaller, the matching employer contribution will be smaller too...)

Debt_Free_Chick

aristote33 wrote: »

Calling to:

- all employees contributing into a company pension scheme provided by their employer (also known as occupational pension scheme).

Have you ever noticed being undercontributed by your company? (Might be worth checking if you have never paid too much attention to the matter)

My employer's contributions are shown on my payslip. I manage my finances using Microsoft Money and need to record the contributions from my payslip - so I would know immediately if the amount were not right.

- all employees administering pension occupational pension contributions in their company.

Have you ever been given more or less clear instructions so that employees who are active members of your company's occupational pension scheme undercontribute so that it consequently cuts the financial commitment (ie. burden) of your company in contributing on top of employee's contributions?

This couldn't happen in our company as we have a process for the calculation and payment of contributions involving HR, Payroll, Finance, IT and the Pensions Manager. Too many people would have to collude to be dishonest for this to happen and - whilst it wouldn't be true to say there is NO risk - the risk in miniscule, in my opinion. In any event, the contributions are coded into the payroll system and with more than 1,000 employees, too many would notice (believe me - they would).

I think the risk of this happening in large organisations is very, very low as we all have processes, procedures and internal controls. These are designed to minimise risk of fraud and mistake - and therefore should catch out any wrongdoing.

In much smaller organisations without internal controls, then the risk could be higher. But we're essentially talking about dishonesty and there is less of that than sometimes appears to be the case.

- everybody on MSE.

Have you ever heard in a close or more distant past of occupational pension scams where employees have been undercontributed to their occupational pension scheme?

Thank you.

No. Thankfully.

MrChips

aristote33 wrote: »

Ever heard about being/been undercontributed in one's occupational pension scheme?

No, but I've heard the one about the Origami Business.

It folded.

novice-saver

There was a happy time when some company defined benefit funds had too much money, according to the government rules (then).

Under those circumstances employers took a "contribution holiday" - the scheme knew about it, the employees knew about it, and it was completely legit.
In extreme circumstances, even the employees were given a contribution holiday too - I was in this situation a few years ago.

Then gordon robbed the pensions industry, and the fund I'm a member of is now a bit short of funds, according to FRS17 rules.

IMHO the UK pension industry has been deliberately crippled because it was (probably) the only solvent pension industry in europe.
You can't get handouts from Brussels if you're flush...

aristote33

Debt_Free_Chick wrote: »

My employer's contributions are shown on my payslip. I manage my finances using Microsoft Money and need to record the contributions from my payslip - so I would know immediately if the amount were not right.

Thank you for your answer, Debt_Free_Chick
Same recording habit from the payslip here too. That's how the problem shows off indeed...

Debt_Free_Chick wrote: »

This couldn't happen in our company as we have a process for the calculation and payment of contributions involving HR, Payroll, Finance, IT and the Pensions Manager. Too many people would have to collude to be dishonest for this to happen and - whilst it wouldn't be true to say there is NO risk - the risk in miniscule, in my opinion. In any event, the contributions are coded into the payroll system and with more than 1,000 employees, too many would notice (believe me - they would).

The situation is:
- one payroll/employee number;
- four variable-time contracts with the same employer and payroll number, signed at different times and running alongside one another;
- a form was signed alongside the earliest employment contract signed to become a member of the occupational pension scheme;
- employee contributions and employer contribution were taken off fine to start with, then it seems the pensions office got mixed up with the various contracts;
- latest occurrence of the matter is how it shows on the payslip in the deductions column: there is one line with pension contributions (say X) and the following line appearing as "pension contributions adjustement" writes off the line above with (say -X) (this has happened for several months now); :mad:
- latest correspondence with the company's pensions office argues that the said 'form to become a member of the pension scheme' should have been signed alongside each and every single contract. Does it make sense where there is one payroll number and there was one pension scheme membership already in place by the time the other contracts were signed? (The underlying assumption being that the employee would change their mind and would prefer to contribute their pension for some of their contracts and not for others...!?)

Debt_Free_Chick wrote: »

I think the risk of this happening in large organisations is very, very low as we all have processes, procedures and internal controls. These are designed to minimise risk of fraud and mistake - and therefore should catch out any wrongdoing.

The latest headcount is over 10,000, with over 7,000 FTE.
Now, what action would you take? Discussing the matter with the officer to ask for arranging payment to catch up with past undercontributions? Referring the matter to their line manager? Asking advice from the pension scheme administrator? Getting in touch with the union?