Skandia Pension demanding refund!

Waps

Hi

I really hope someone can give me a bit of guidance on this, I'll try and be brief!

I had a Skandia stake-holder pension for about 5 years - In January 2010 I decided to move it to a different provider.

This was all quite simple.

Unexpectidly, nine months later, in September 2010 Skanida contacted me to say they had a "rebate" for me which I could either forward tax free to my new pension, or take as taxed cashed.

I opted for the cash option and spent the money on essentials (as you do)!

Fast forward to yesterday and I get a letter from Skandia saying they paid me in error, and are demanding back the £1680 they paid me last year.

After calling them, they said, "it looks like the HMRC have calcualted, in error, a rebate to you... then something to do with a "triviality payment" and then something about an "auto-recovery" finshing off with something about "mis-calculated contracted out payments"... to be honest i was lost at the start.

Skandia said they have had to pay back the HMRC and in turn they are now asking me for the money back to refund them.

Obviously, I know zero about how all this works and took the money in good faith, believing it to be correct. Especially as they rang me to give me a choice of cash or tax free sum to new pension.

My question is, am I obliged to pay this back to Skandia? As far as I can tell, they have already refunded the HMRC and subsequently are the one's out of pocket.

When I spoke to them, and before I'd even asked any questions, the advisor said "it is repayable by you... but if you don't agree you can write an appeal letter stating your case".

Under the circumstances it doesn't seem fair to have to pay it back, but obviously if it has to be, it has to be.

Any advice greatly received.

dunstonh

My question is, am I obliged to pay this back to Skandia?

Yes. If HMRC paid Skandia the rebate and the clawed it back (presumably as you had contracted back in) then you should repay it as the money is not yours.

Under the circumstances it doesn't seem fair to have to pay it back

Why not? its not as if you have lost money. At the moment you have double the benefit. They are just asking back what you should not have.

Normally in these cases you can agree to pay back the money over a period of time.

Waps

Thanks for the reply...

Is it fair? Really? To pay someone something making you think it is yours then asking for it back?

Had they said "here's £1600 but we want it back next year" I'd have said no thanks, I don't want a loan, which is essentially what it seems to have become.

I get the feeling skandia have reported something wrong to HMRC hence the refunding arising in the first place - therefore I'd say due to their mistake, its them that should foot the bill?!

I guess what you're saying is any future refunds from anyone at anytime, never spend, as it could be an error?

Why didn't the HMRC ask ME for the money back directly? I understand tax errors you have to pay back even if it's their fault - in this case it appears to be skandia's error as they are the ones approached by the HMRC.

Why do you say I benefitted twice? Don't geddit?!



As far as I know I have not contracted back in, but will check this.

TrickyDicky101

I agree with you here - you will be exposed to hardship through no fault of your own. I would also confirm what Skandia is expecting you to pay back because I suspect it will be the full amount gross of tax which would then leave you out of pocket (as you received net). If so, you might not then be able to get the tax back.

Companies like Skandia hate publicity especially when the 'victim' isn't rich or well off so I would consider first seeing if Skandia will agree to a reduced settlement and next I would write to the financial pages of one of the national newspapers (take your pick - each is likely to have a financial agony aunt/uncle) and provide details of your situation and how it is causing you hardship. I suspect this would result in Skandia being a lot more prepared to agree an easier settlement with you.

magpiecottage

TrickyDicky101 wrote: »

I would also confirm what Skandia is expecting you to pay back because I suspect it will be the full amount gross of tax

OP says they were asked for the £1,680 they received.

It seems unlikely that the error was Skandia's. They would simply have followed HMRC directions.

dunstonh

I get the feeling skandia have reported something wrong to HMRC hence the refunding arising in the first place - therefore I'd say due to their mistake, its them that should foot the bill?!

It more likely sounds like HMRC recalling a rebate. Skandia don't suddenly return money to HMRC unless they are asked to.

Remember we are not talking about non protected rights here but protected rights.

kidmugsy

Why not ask Skandia for a letter setting out the issue, then post it here for people to comment on?

The other thing you could do is ask yourself how you'd feel if you paid out something in error, asked for it back, and were told "sod off".

Waps

kidmugsy wrote: »

Why not ask Skandia for a letter setting out the issue, then post it here for people to comment on?

Absolutely i will - thanks for the idea!


The other thing you could do is ask yourself how you'd feel if you paid out something in error, asked for it back, and were told "sod off".

I'd be peed off, but then again I'm not a regulated industry with fully qualified staff issuing refunds using the information available! If I were "giving" someone £1680 of my own money, I would be pretty certain it was due...

Waps

dunstonh wrote: »

It more likely sounds like HMRC recalling a rebate. Skandia don't suddenly return money to HMRC unless they are asked to.

Remember we are not talking about non protected rights here but protected rights.

For the record I am still contracted out - I just checked with the advisor I used to shift the pension. What difference does that make?

Cheers

Waps

What's the worst that can happen anyway? Non-payment will lead to... ?

jamesd

Have you phoned the HMRC contracted out helpline? If not, give them a call. They should be able to tell you exactly what happened. They are also the people who will sort out any errors on HMRC's part or confirm whether Skandia is getting something wrong or not.

I may be able to explain part of it. In 2009/10 the upper accrual point for NI was introduced. This reduced the amount of NI and contracted out rebate payable to a lower level than the previous upper earnings limit but a HMRC error meant that rebates were still calculated the old way. HMRC have been contacting providers asking them to return the overpayment, which will probably be under £100. This only applies to people who are close to or above the higher rate tax bracket.

First find out from HMRC what it's all for and for which tax years. Once you have that information you can decide how to proceed. If you don't know what the things mean, take good notes and ask here.