Company delaying putting contributions in- is it 'normal practice'?

jamesd

See the reporting late payments document that I linked to earlier for when SW should have reported.

SW should have made a formal request for information to enable them to monitor the payment of contributions. Ask SW if they have done this.

If there was not a response from the employer within 30 days then SW should have reported to the Pensions Regulator within 60 days of the date they requested the payment information, if SW believes that the failure is "material" to the Regulator. See 21 and 22 in the document for more on what is material. Examples include:

1. A payment that is unpaid more than 90 days after the due date.

2. Dishonesty or misuse of assets, for example using the contributions to alleviate cashflow difficulties. (Be sure that SW knows about not paying steel and safety clothing bills!)

See the rest of them as well.

"Where managers identify a late payment, they should take action to obtain any contributions that are still outstanding. They should do this by raising the matter with the employer as soon as practicable."

SW needs to be made as well aware of the situation as possible so that they are fully aware that they are on notice that they are expected to act as required to ensure that payments are made or the regulator notified.

Note that SW may be reluctant to do much because the employer decides who to have as a pension company and could switch to another one.

Ensure that you have unemployment insurance in place!!! A report to the regulator could result in the company directors concluding that it is or soon will be trading while insolvent. Which is clearly a risk given the description of the situation. Within hours or days of the directors coming to that conclusion nobody will be working at the company except those winding it up.

dunstonh

One more point- Shouldn't Scottish Widows, as trustees, have reported this?

No. They deal with money they receive. Not money they havent been sent. Remember this is a GPPP not a COMP/CIMP or Defined benefit scheme.

gadgetmind

jamesd wrote: »

SW should have made a formal request for information to enable them to monitor the payment of contributions. Ask SW if they have done this.

I'm pretty sure this isn't how it works for a group personal pension.

Ensure that you have unemployment insurance in place!!!

Doesn't this usually have an initial period during which a claim cannot be made?

jamesd

dunstonh wrote: »

No. They deal with money they receive. Not money they havent been sent. Remember this is a GPPP not a COMP/CIMP or Defined benefit scheme.

If you haven't checked it yet please see the code of practice I've referenced and quoted from, which covers group personal pensions.

gadgetmind wrote: »

I'm pretty sure this isn't how it works for a group personal pension.

I was quoting from "Reporting late payment of contributions to personal pensions". And:

"To whom is this code directed?

3. The code is directed at the managers of personal pension schemes, including stakeholder plans, where there is a direct payment arrangement in place. The code is also relevant to employers in relation to the provision of payment information needed by managers for monitoring purposes."

gadgetmind wrote: »

Doesn't this usually have an initial period during which a claim cannot be made?

Starting that now beats starting it later.

buel

Thank you all so much for your help and advice. I believe the employer has now (finally) been reported to the Pensions Regulator.

jamesd

Please let us know how it goes. Situations like this one where there seems to be financial difficulty as well can be tough.

buel

jamesd wrote: »

Please let us know how it goes. Situations like this one where there seems to be financial difficulty as well can be tough.

Thank you for this. I certainly will.

Just one more thing: I have been advised to find out if my employer has paid their pension insurance levy? What is this and is it relevant please?

jamesd

It isn't relevant. It applies only to defined benefit schemes, like final salary types. It's a levy to pay for the Pension Protection Fund that pays out most of the benefits due on such pensions if the employer stops trading and the pension scheme doesn't have enough money to meet all of its future payment obligations. The fixed amount of initial capital and obligation to pay out for many decades is the big risk of schemes like this.

The issues with schemes like the one we've been discussing are different and those schemes are covered instead by the Financial Services Compensation Scheme for some risks, though not investment gains and losses. The main risk that the PPF is set up to cover doesn't exist with your type of scheme because the value of the pension is just whatever the value of the investments is. There's no risk at all if the employer ceases trading because all of the money is held in trust for the individuals who own the money. Except that the value of any contributions not yet paid into the pension may be lost. It's also safe from failure of the pension provider because the money is held in trust for the owners, independent from the finances of the pension provider.

So once the money is in your pension pot, it's safely yours.

buel

Thank you for that!

jamesd

Who do you propose take out the employee's money? The employer can't do it, the group pension provider would refuse because it is not allowed. It's a one way transaction, money in, no money out, except quickly correcting mistakes.