Incorrect Pension advice

Footiewidow

Earlier this year my husband was told by his HR dept that he could cash in his current pension and transfer to the new pension scheme that had been up and running for a couple of years. There had been approx 20 staff that had already completed this process in 2012, and so We filled out forms to make an inquiry, which we received and studied and decided to go ahead, The new pension scheme looked better than the old one and our financial situation could do with a injection of a cash payment and monthly payments.
We filled in all relevant forms and was told we had to give three months notice, the transfer would commence from the old to the new on 1.5.13 and our cash settlerment chq could be expected within 4-6 weeks with monthly payments being made on the 20th of the month.
At week 7 after chasing the whereabouts of the chq we received a call from HR to explain that they had made 'an error' and that he was not entitled to transfer and make the claim as he is only 51yrs.
We have submitted a grievance to his work as the staff whom had completed the transfer and had payment made in 2012 were under 55yrs.
At the moment this is ongoing with HR saying (after a Trustees meeting) that they standfast and that they will re-instate the old plan and pay any missed payments to bring us up to date.
However does anyone think we would be entitled to compensation?? as we have borrowed money against the chq being received and put deposits down to have work completed on our house. If so is there a limit to the amount we could claim...??
This has caused me and my husband no amount of stress and upset.

dunstonh

At the moment this is ongoing with HR saying (after a Trustees meeting) that they standfast and that they will re-instate the old plan and pay any missed payments to bring us up to date.

That is the logical and most sensible position for them to take and the right one for you.

However does anyone think we would be entitled to compensation?

£10-£100 for inconvenience but cant see any more.

as we have borrowed money against the chq being received and put deposits down to have work completed on our house.

You should never spend money you do not have. That is not the fault of anyone else.

I know that isnt what you want to hear but I cannot see this being a compensation issue. There is also strong probability that the forms you filled in would have mentioned age 55 and the error should have been spotted by you as much as they should not have made it.

hyubh

Footiewidow wrote: »

Earlier this year my husband was told by his HR dept that he could cash in his current pension and transfer to the new pension scheme that had been up and running for a couple of years. There had been approx 20 staff that had already completed this process in 2012, and so We filled out forms to make an inquiry, which we received and studied and decided to go ahead, The new pension scheme looked better than the old one and our financial situation could do with a injection of a cash payment and monthly payments.

In what way was the new scheme 'better'? I may be wrong, but this sounds like there was an old final salary scheme that the company was looking to move people off of, so dangled the carrot of a 'flexible retirement' in which an employee drew the old DB ('defined benefit') pension early, presumably with reductions, and enrolled in a DC ('defined contribution') scheme going forward. (In a DB scheme, all the risk is with the employer/pension fund; in a DC scheme, all with the employee.)

We filled in all relevant forms and was told we had to give three months notice, the transfer would commence from the old to the new on 1.5.13 and our cash settlerment chq could be expected within 4-6 weeks with monthly payments being made on the 20th of the month.

Your use of the word 'transfer' here is a bit confusing - normally, 'transferring' in a pensions context means a monetary amount representing the value of an old pension is invested (or depending on the scheme, buys membership) with a new one. What you are describing is actually drawing the old pension however.

At week 7 after chasing the whereabouts of the chq we received a call from HR to explain that they had made 'an error' and that he was not entitled to transfer and make the claim as he is only 51yrs.
We have submitted a grievance to his work as the staff whom had completed the transfer and had payment made in 2012 were under 55yrs.

In law, the earliest you can normally draw a pension is 55 - under that, and it counts as an unauthorised payment with both the recipient and the pension scheme administrator being liable for a hefty tax charge.

At the moment this is ongoing with HR saying (after a Trustees meeting) that they standfast and that they will re-instate the old plan and pay any missed payments to bring us up to date.

That's what they must do by law. Frankly, if I'm right about the company's motivations for making the proposal in the first place, your husband has made a lucky escape.

Footiewidow

Thank you for your reply.
1. We were told on at least 3 separate phone calls that everything was going through and the Cheque would be forthcoming. This is the only reason we borrowed against it.
2. Apparently the pension can be cashed in under 55 but only if you have left the company, which we didnt know and apparently they only realised just prior to the issue of the cheque. And this was their Error.

Does this change our status for compensation...??

We actually left the old pension and joined the new one, two payments were taken for the new pension scheme which we have had to cancel to ensure a refund of our monies paid in....a total of £300 which we are still waiting to be refunded.
At the moment we are pensionless...

Footiewidow

We certaintly dont feel like we have had a lucky escape, our life has been turned upsidedown by this. We are financially worse off due to their Error surely this constitues compensation even if this is just to cover what we are out of pocket by......

hyubh

Apparently the pension can be cashed in under 55 but only if you have left the company,

The possibility of 50 and not 55 or over arises from this (from HMRC's website, regarding membership 'of a company or public sector scheme'):

'You'll have a protected pension age if on 5 April 2006 you had the right to start taking your pension before you were 55. This right to take your pension before 55 must have been set out in the scheme rules on 10 December 2003. Your scheme administrator can tell you if this applies to you.'

http://www.hmrc.gov.uk/pensionschemes/protec-pen-age.htm

This implies HR are now claiming the historic scheme rules gave a right to early retirement from 50 if the employee left their job - perhaps their initial mistake was forgetting the 'if' part. That said, instead of taking HR's word for it (since as we've seen, they aren't great when it comes to pensions geekery), I'd get in touch with the scheme administrators to find out what the situation actually was and is.

We actually left the old pension and joined the new one, two payments were taken for the new pension scheme which we have had to cancel to ensure a refund of our monies paid in....a total of £300 which we are still waiting to be refunded.

So... was the old pension a final salary one?

somethingcorporate

What are you out of pocket by?

It sounds like they are going to put you back in the position you would have been in.

Spending money you do not have is not the company's fault.