pension calculation error

renege

I have been in receipt of a pension from a worldwide banking organisation for 6 months. I had several quotes from the scheme as I wanted to retire before the age of 60 and finally agreed the amount in March 2011. The first payment was made in June 2011. I was 60 in October 2011. This is a final salary pension and calculations were made accordingly.
Then I received a letter in December 2011 stating that an error had been made in the calculation by the scheme administrators and that the amount I receive is to be significantly reduced from February 2012.
I am disputing this with the scheme trustees. I had based my financial decisions in March 2011 on the information provided and I am flabbergasted that a financial institution can renege on what I had considered to be a financial agreement. If the new calculated amount had been provided I would have waited until I was 60 to take the pension - it was, afterall, only another 4 months away.
Are people aware that quotes for pension amounts - even final salary pensions - can be changed at any time by the scheme administrators? without any justification except they made a mistake with the calculation?
Is this just and fair and can this anomaly be exposed and put right please?
Thank you

agrinnall

Was this a defined benefits scheme, and was your normal retirement age 60? If so then I wouldn't have expected a significant reduction in the pension payment for retiring 4 months early. I'm not sure if there is a way of challenging the decision but I expect other people will know.

fairleads

renege wrote: »

I have been in receipt of a pension from a worldwide banking organisation for 6 months. I had several quotes from the scheme as I wanted to retire before the age of 60 and finally agreed the amount in March 2011. The first payment was made in June 2011. I was 60 in October 2011. This is a final salary pension and calculations were made accordingly.
Then I received a letter in December 2011 stating that an error had been made in the calculation by the scheme administrators and that the amount I receive is to be significantly reduced from February 2012.
I am disputing this with the scheme trustees. I had based my financial decisions in March 2011 on the information provided and I am flabbergasted that a financial institution can renege on what I had considered to be a financial agreement. If the new calculated amount had been provided I would have waited until I was 60 to take the pension - it was, afterall, only another 4 months away.
Are people aware that quotes for pension amounts - even final salary pensions - can be changed at any time by the scheme administrators? without any justification except they made a mistake with the calculation?
Is this just and fair and can this anomaly be exposed and put right please?
Thank you

I sympathise, and suggest you hound them until you get what you feel is due to you. Many years ago, but in a slightly different scenario, i had occasion to challenge a pension calculation on behalf of a client. Suffice to say that after almost a year of bickering the Life co sent me an Excel spreadsheet containing all the relevent calcs. It took me less than 5 mins to spot the error.

renege

Thank you for your reply. Yes, this is a defined benefit scheme and my normal retirement age is 60.

CLAPTON

if its a defined benefit scheme then calculating the pension is usually very staight foreward
what is your calculation?

renege

Yes, thank you, the calculation should be straight forward. But, there is an 'early retirement' factor which is apparently causing the error. I have not been told the original 'wrong' calculation or the new 'correct' calculation. I have requested this information from the scheme administrators. But I have become so mistrustful - it seems the calculation could change anytime. Is there no ethical or moral ruling here that the scheme should honour its original agreement - it made the error after all.

CLAPTON

share the details

molerat

They can reduce the pension to correct errors but they cannot recoup any overpayments without your explicit permission or court order.

RichandJ

renege wrote: »

Yes, thank you, the calculation should be straight forward. But, there is an 'early retirement' factor which is apparently causing the error. I have not been told the original 'wrong' calculation or the new 'correct' calculation. I have requested this information from the scheme administrators. But I have become so mistrustful - it seems the calculation could change anytime. Is there no ethical or moral ruling here that the scheme should honour its original agreement - it made the error after all.

No. If there's been an error, and assuming they've now got the calc right, it means the money isn't yours. Errors do happen, mainly because pension administration is the ar5e end of any pension department, lowest pay & resources etc and you know what you get when you pay peanuts.

It could also be due to factors outside the actual administrator's control, such as a change in early retirement factors or commutation rates. These are usually provided to administrators late or after the date of implementation and the actuaries & consultants responsible for them run away & hide when faced with irate members whose benefits have changed.

As Clapton said, we'd need more details to comment on your actual case - keep pressing for copies of both calcs, the original 'incorrect' one and the latest version.

renege

Thanks for your feedback. I will share the details when I receive them from the administrators.
Interesting comment - that in this instance it is ethically ok for a bank to provide incorrect financial information to a customer on which they are to base their financial future.

atush

You can always file a formal complaint the the authorities or even go to the broadsheet newspapers for redress. B ut you need to give them time to give you the calculations first (the old incorrect and the new correct ones). If they refuse to then keep going and you could perhaps take them to small claims court as a last choice.