Incorrect Pension Contributions & Lost Growth

edinburgher

When I joined my current employer, I asked to make 6% contributions into my pension, so as to gain the matched employer contribution of 6%.

I have been paying into the pension for just under 2 years and discovered last November that the payments have been wrong since day 1 :eek:

The amounts involved aren't massive (low ££££), but I'm painfully aware of how little a pension pot 'buys' these days and need to get this resolved.

My employer is not disputing the fact that the payments have been wrong, but they are proving to be infuriatingly slow at resolving the matter. I've tried the softly softly approach, but I'm basically being ignored. I'm currently writing down what I see the main issues to be/what I expect as a prelude to a grievance.

Does the following sound reasonable?

• Correct future payments so that the discrepancy doesn't get bigger (resolved, although I received no update despite a meeting and 2 emails on the subject)
• Pay outstanding employer contributions
• Deduct outstanding employee contributions from my salary
• Make an appropriate payment to my pension to reflect lost growth as a result of their undisputed error (they have advised that an 'acturial revision?' can be carried out, but is it realistic to expect them to be accountable for the mistake?)

Thoughts appreciated, this is weighing on my mind a bit.

bigadaj

Seems reasonable, playing devils advocate then if this is two years down the line you are likely to have had at least one annual statement so could have picked up on this much earlier.

Will the difference impact on your tax relief, ie 40% or 20% as this might vpne something else you could try to resolve.

Assuming this is defined contribution the growth will be variable depending on what you've invested in. What contributions have been, I'd presume the contributions would have been split ina similar manner in which case you can check performance from fund sheets to see if their redress is accurate and sufficient.

edinburgher

I completely agree with you - I wish I had spotted this earlier and it's a pain in the behind to be faced with an unexpected £700 deduction while saving for a baby :eek:

That said, there's a known fault with the software used to calculate contributions, they don't dispute my request to pay 6% (at no point at 3 different annual salaries have they taken 6%) and at no point have they challenged my stated belief that they are responsible for the shortfall.

It shouldn't affect my tax band, although if I had waited another year before resolving this, it might well have.

Thanks for commenting.

xylophone

My employer is not disputing the fact that the payments have been wrong, but they are proving to be infuriatingly slow at resolving the matter. I've tried the softly softly approach, but I'm basically being ignored. I'm currently writing down what I see the main issues to be/what I expect as a prelude to a grievance.

http://www.pensionsadvisoryservice.org.uk/when-things-go-wrong
might be worth a look.

bigadaj

OP, it might be worth suggesting that your employer might consider contributing some or all of your contributions that haven't been made. If you don't ask you don't get after all.

Debt_Free_Chick

edinburgher wrote: »

My employer is not disputing the fact that the payments have been wrong, but they are proving to be infuriatingly slow at resolving the matter. I've tried the softly softly approach, but I'm basically being ignored. I'm currently writing down what I see the main issues to be/what I expect as a prelude to a grievance.

Does the following sound reasonable?

• Make an appropriate payment to my pension to reflect lost growth as a result of their undisputed error (they have advised that an 'acturial revision?' can be carried out, but is it realistic to expect them to be accountable for the mistake?)

Thoughts appreciated, this is weighing on my mind a bit.

Making a payment to reflect the lost growth is not unreasonable and is what most pension administrators & advisers would confirm is the right action, in this situation. Making this calculation is not simple though. Someone has to retrace every contribution (monthly?) and work out what the correction needs to be.

The solution could be complicated if your contributions have been incorrect - have they? Have you paid 6% but your employer paid less? Or, were your contributions wrong as well?

edinburgher

Or, were your contributions wrong as well?

Yes, both wrong.

Thankfully our payroll is processed by a major local authority who have actuaries for this sort of fix

Debt_Free_Chick

edinburgher wrote: »

Yes, both wrong.

Thankfully our payroll is processed by a major local authority who have actuaries for this sort of fix

Have you paid the missed contributions from the past, as well?