Company changing my pension... advice

nej

Hi all,

The company I work for got bought out a few months ago and they are sorting out the pensions.

I was on a 5% non-contributory pension, i.e. the employer paid 5% and I paid nothing. They are now changing this to a Stakeholder scheme where I have to pay 3% in order to get the 5%. If I don't pay 3% I don't get anything.

I asked our FD that if my contract stated I don't have to contribute what would happen. He said they would honour it. I thought this was all well and good, but then I looked at my contract. It doesn't specifically state non-contributory. It simply says "the company will pay 5%". It doesn't say that I don't have to contribute, but then it also doesn't say that I do have to contribute to get this.

Any thoughts on this? With the ambiguos(sp) wording of the contract, am I still entitled to a 5% non-contributory pension?

dunstonh

It seems that they are moving towards the NPSS model that comes in 2012. In fact, you may have to increase your personal contribution to 4% rather than 3% as that was a recent change in the proposals. However, that decision is with your company as they only have to make sure that they match their side of the NPSS.

I very much doubt your contract of employment gives you any entitlement to a non-contributory pension. Especially if it is worded as you say it is. They are still paying 5% as long as you pay some yourself.

nej

Thanks for the reply.

I'm getting different responses from different people. A couple of colleagues have said that, given the contract does not state I have to contribute, merely that the company will pay 5% - with no conditionality that it is based upon me paying anything, that I should get it.

As an IFA do you think the CAB would be a good place for advice here, should it come to that?

dunstonh

Everyone is an expert when it comes to contracts. Except no-one is apart from the real experts. So, I am not answering on the basis of being an expert. I am answering it on the basis of what I believe would be the case.

The contract does not say anything about being non-contributory. It says they will pay 5% and that is what they are doing. There is also a good chance, if its a large company, that they have already had the contract position reviewed. Any sensible company would.

The CAB may be a help but my experience of the CAB (and I do have some as I have been contacted a few times to help in cases) is that the individuals at the CAB tend to believe that everyone is a victim even when they arent. So, initially you may be given encouragement which is later quashed by the professional's it gets referred to. Going straight to a solicitor with the contract and asking the question as to whether you have a case is probably the best option. Most solicitors do not charge for the first half hour and on something like this they would tell you there and then if you have a case or not without needing to spend time or money. Using a solicitor is going to be the only definitive way to get an answer.

nej

Thanks once again for your valuable advice.

I wouldn't be suprised if they hadn't looked closely at contracts, after the fiasco when they made people redundant...