Is PILON pensionable service?

bondy01

Are there any rules for this? I took VR some years ago and physically stopped working at the end of April that year but according to a letter I have , I should have received 3 months further credit to my pension. I started taking my pension at 50 back in 2009 and the paperwork for that states a leaving date from the scheme of 30th April. Am I being underpaid? What confuses this is an ex colleague is being made redundant and he has been told PILON is not pensionable service. It's no longer the same pension scheme as that part of the company was sold off and his is effectively with a different company although he is still entitled to a pension at 55 (with reduction) with the company I get my pension from in addition to the new company scheme.

Loughton_Monkey

I fail to see how it can possibly be pensionable.

A contract of employment would (typically) give three months notice. Obviously, if pension is part of the contract, then pension would normally continue to be paid (with salary) for the 3 month notice period.

The whole concept of Payment in Leiu of Notice is that the employer is technically breaking the contract. You theoretically do not have to accept this. 99.99% of people do. In return for their breaking their contract, you are accepting a tax free sum of money representing 3 months gross pay. You could/should have tried to negotiate an extra figure of "Pension in leiu of notice" but I've never heard of this succeeding.

You had full tax relief on the payment. There was nothing to stop you paying it into a private pension provided you had sufficient taxable earnings in that tax year.

bondy01

Thanks for your response. I don't understand your answer though. In my case the employment was from 1981-2002 for which I received 18 months salary (first 30K tax free) plus the pilon when I left. I certainly didn't have full relief on payment in lieu of notice as I'm sure you know this is taxable in my case. It almost sounds like we are talking about different things. In my case it was part or the telecom crash a decade ago but as I have said I have a letter stating that I would have those 3 months credited to my pension entitlement.

Loughton_Monkey

Well OK. A letter stating that they would give you those 3 months of pension 'sorts' it. But my concern, now, would be whether or not the 'company' (i.e. the one you worked for) is in existence to make up the error. After all, you are quesrying something about 10 years after the event. The Pension administrator has no interest or blame and cannot remedy anything since they simply 'administrate'. [However, we cannot rule out that they have made an administrative error]

Just to clarify what I was saying. It is always important, in employment law, to understand 'contractual payments' and 'non contractual' payments. You say you got 18 months' salary. Technically you didn't. You got a non contractual redundancy payment representing the same amount as 18 months salary. In addition, since you were not required to work out your 3 months notice, you received another 'non contractual' sum of representing 3 months salary. Had this been the only money you had received, then it would itself have been tax free (up to £30K). [In your case it is academic, in view of the much larger redundancy payment, but sometimes HMRC get a bit shirty about 'pilon' if it is used simply to avoid tax].

Sometimes, such a redundancy would be backed up by other 'goodies' such as (in your case it seems) additional pension rights, use of company car - or possibly ability to buy car at reduced price - or sometimes a further payment representing loss of bonus... Again, these are non contractual but since they are benefits in kind, they are generally thought of as taxable, although the pension contribution would, by its nature, be subject to appropriate tax relief.