pension calculation error

Zelazny

RichandJ wrote: »

You just have to hope you have a numerate, literate administrator doing your figures.

Even that's not enough sometimes. I worked as a pensions administrator for nearly 5 years, and dealt with schemes that were in wind up. When a scheme goes into wind-up you have to go through all of the rules and make sure that everything has been done right - and I don't think I ever found a scheme where everything had been done right.

The case that most sticks in my mind was for a scheme that we inherited from another administrator. The scheme rules said that Final Pensionable Salary (FPS) was defined in a particular way, but the previous administrator had been using a completely different definition, so every single person in the scheme had the wrong benefits. Because it was a wind up scheme, all members had been deferred so we had assumed that the benefits at leaving were correct - and it was only when one member queried his FPS that we actually dug into the rules and confirmed.

That was not fun to correct...

RichandJ

Zelazny wrote: »

Even that's not enough sometimes. I worked as a pensions administrator for nearly 5 years, and dealt with schemes that were in wind up. When a scheme goes into wind-up you have to go through all of the rules and make sure that everything has been done right - and I don't think I ever found a scheme where everything had been done right.

The case that most sticks in my mind was for a scheme that we inherited from another administrator. The scheme rules said that Final Pensionable Salary (FPS) was defined in a particular way, but the previous administrator had been using a completely different definition, so every single person in the scheme had the wrong benefits. Because it was a wind up scheme, all members had been deferred so we had assumed that the benefits at leaving were correct - and it was only when one member queried his FPS that we actually dug into the rules and confirmed.

That was not fun to correct...

Ouch. I can imagine.

Just did a data cleanse on a scheme myself last year. Almost every deferred had to be re-calc'd, the record keeping was abysmal and that was a scheme we'd had for 20 years.

Currently doing some (new) Annual Allowance figures, manually becuase the whizzy system calc hasn't been released yet, and the same rubbish record keeping is coming up, hence my slightly peevish rants above.

renege

"but if 3 different people have checked the figures and a mistake is still made surely some one should be accountable "

I am of the belief that the Scheme should be accountable and that the quoted and checked figures should be adhered to. This is what happens in other walks of life - an agreement is made and honoured. The fact that in this instance different rules seem to apply is what should be challenged. Because something has been the rule in the past does not mean it is the 'right way' to behave and we should question this. We are not - and this I think should be remembered - simply talking about mathematical calculations. We are talking about the impact on peoples' lives and enabling them to make informed decisions about their pensions.

CLAPTON

renege wrote: »

"but if 3 different people have checked the figures and a mistake is still made surely some one should be accountable "

I am of the belief that the Scheme should be accountable and that the quoted and checked figures should be adhered to. This is what happens in other walks of life - an agreement is made and honoured. The fact that in this instance different rules seem to apply is what should be challenged. Because something has been the rule in the past does not mean it is the 'right way' to behave and we should question this. We are not - and this I think should be remembered - simply talking about mathematical calculations. We are talking about the impact on peoples' lives and enabling them to make informed decisions about their pensions.

indeed so

but you haven't shared the figures yet

nor said how you would feel if the figures had been the other way around

Zelazny

renege wrote: »

"but if 3 different people have checked the figures and a mistake is still made surely some one should be accountable "

I am of the belief that the Scheme should be accountable and that the quoted and checked figures should be adhered to. This is what happens in other walks of life - an agreement is made and honoured. The fact that in this instance different rules seem to apply is what should be challenged. Because something has been the rule in the past does not mean it is the 'right way' to behave and we should question this. We are not - and this I think should be remembered - simply talking about mathematical calculations. We are talking about the impact on peoples' lives and enabling them to make informed decisions about their pensions.

But if the scheme is accountable, then it is the other scheme members who lose out - particularly for schemes that already have money problems. Would you apply the same criteria in cases where the benefits should be higher than they are?

The administrators can be held to account - I know of cases where administration companies have been sued for maladministration, or have not been paid all the fees that were due because of errors - and in some cases the cost of providing additional benefits can be met by whoever made the mistake, but this would usually only apply if an error was made and went uncorrected for over 6 years.

You can certainly challenge any decision to change your benefits - that's what the Internal Dispute Resolution Process is all about. If you can show that the original quote gave you an expectation of a certain level of income, and that you have made financial decisions based on this, then you stand a chance of coming to some sort of arrangement. If you're not happy with the IDRP result, you can take it to the Ombudsman and see what they think - at the end of the day though, the Trustees and the Ombudsman have to consider what's best for all members of the scheme, and not just for you.

xylophone

CLAPTON wrote: »

indeed so

but you haven't shared the figures yet

nor said how you would feel if the figures had been the other way around

Indeed!

That said, anyone can appreciate that the situation is worrying and frustrating.

A thought has occurred to me - is your pension going down by a substantial amount from February just to recover the overpayment but will revert to a higher sum in due course?

casey_junior

This is a post from a thread I started earlier which I think has a slight comparison due to mistakes by trustees.

If I may come back to this with the salient points.
I have a small pension for an employment between 1988 and 2001 which has been in windup since 2001 and which was to commence payout at the end of December 2011.
In July 2011 the FAS/PPF told me that they would be paying me a pension of £1970 pa, contributions pre 1997 not indexed, post 1997 indexed at max 2.5%, full stop, which would mean a max annual increase of about 0.8% on the total pension.
In mid December, I was told by the pension administrators/trustees that they would be paying a pension (in respect of an estimated capital value of £37000) of £1709 pa, indexed at max 5% on c30% and max 3% on 70%. There would also be a cash sum of £2800 and a spouses pension of 50%.
When I eventually was able to contact the trustees, they couldn't tell me who would be paying my pension.
This week I got a pay advice from FAS/PPF, so now I know that the administrators won't be paying, which disappointed me because on a rough calculation I found that the admin pension was by far a better deal than FAS/PPF.
I also got an email from the admins. saying they hadn't contacted FAS/PPF, but if FAS/PPI were paying, then the admins wouldn't be.
This is from a company "the worlds best pension plan administration provider".

As I seem to be getting a worse deal from FAS, can I pursue the trustees for recompense?

Zelazny

casey_junior wrote: »

This is a post from a thread I started earlier which I think has a slight comparison due to mistakes by trustees.

If I may come back to this with the salient points.
I have a small pension for an employment between 1988 and 2001 which has been in windup since 2001 and which was to commence payout at the end of December 2011.
In July 2011 the FAS/PPF told me that they would be paying me a pension of £1970 pa, contributions pre 1997 not indexed, post 1997 indexed at max 2.5%, full stop, which would mean a max annual increase of about 0.8% on the total pension.
In mid December, I was told by the pension administrators/trustees that they would be paying a pension (in respect of an estimated capital value of £37000) of £1709 pa, indexed at max 5% on c30% and max 3% on 70%. There would also be a cash sum of £2800 and a spouses pension of 50%.
When I eventually was able to contact the trustees, they couldn't tell me who would be paying my pension.
This week I got a pay advice from FAS/PPF, so now I know that the administrators won't be paying, which disappointed me because on a rough calculation I found that the admin pension was by far a better deal than FAS/PPF.
I also got an email from the admins. saying they hadn't contacted FAS/PPF, but if FAS/PPI were paying, then the admins wouldn't be.
This is from a company "the worlds best pension plan administration provider".

As I seem to be getting a worse deal from FAS, can I pursue the trustees for recompense?

The Trustees will only be following the law that applies in this case, so it's very unlikely you have any claim on them, and if the scheme is in wind up then the scheme will have no money to give you anyway.

How much pension were you expecting if the scheme had not gone into wind up, and did you receive any tax free cash sum from FAS when your pension commenced?

renege

"I am of the belief that the Scheme should be accountable and that the quoted and checked figures should be adhered to.
We are talking about the impact on peoples' lives and enabling them to make informed decisions about their pensions."

Response Clapton "indeed so

but you haven't shared the figures yet

nor said how you would feel if the figures had been the other way around"

Response Zelazny "You can certainly challenge any decision to change your benefits - that's what the Internal Dispute Resolution Process is all about. If you can show that the original quote gave you an expectation of a certain level of income, and that you have made financial decisions based on this, then you stand a chance of coming to some sort of arrangement. If you're not happy with the IDRP result, you can take it to the Ombudsman and see what they think - at the end of the day though, the Trustees and the Ombudsman have to consider what's best for all members of the scheme, and not just for you. "


Thank you for the responses: The figures that I am discussing are an original promised pension of £17,442 pa with a proposed reduction to £16,638 pa.

It would be a better and more acceptable process if a Pension Scheme, when quoting pensions to employees, provided and stated the calculation used. If the employee is deciding whether to take the pension at that time then they have the option of getting it checked externally if they choose to. If the amounts are agreed by both the Scheme and the employee then an agreement or contract should be made and the amounts would be final. This would allow the employee to take some responsibility and make informed decisions about their pensions. As it is, we rely rather blindly on scheme administrators who can and do make mistakes, which can impact our financial positions.

In my case, I have written to the Scheme trustees and will follow the IDRP and contact the ombudsman if necessary. I can show show that the original quote gave me an expectation of a certain level of income, and that I have made financial decisions based on this....so we'll see what happens.
It won't be quick I feel.

xylophone

As a matter of interest, what would you have expected your pension to have been if you had not retired four months early? (40/60 of final salary?) How does this compare with the amount you have been getting and the amount you will be getting?