Capita (Civil Service Pension) issue - help!

Stux

Would be interested in hearing opinions on an issue my wife has with Capita over her pension.

Background is she was made redundant in 2006 when her department moved from Edinburgh to Inverness. This was on enhanced terms.

Throughout the process in 2006 she received estimates of benefits she should get, this essentially was an immediate compensation lump sum equivalent to 3 times her enhanced pension rights, plus an annual compensation payment equivalent to her annual pension. At age 60 (which she has just reached) the compensation payments end, she was to get a Preserved Pension at the same amount plus a Preserved Lump Sum again 3 times her pension.

She opted to commute her annual compensation payment for a lump sum in 2006.

Now, throughout the process in 2006 estimates being issued to her referred to the preserved lump sum less widowers as being payable immediately alongside her compensation lump sum and commuted compensation payment. She continually queried that, we remember, feeling it was incorrect and the preserved lump sum and pension should have both become payable on her 60th birthday in 2014 (just past).

The final record she has of correspondence at that time is dated two days before her redundancy date, and that (finally) shows her preserved pension as payable in 2014 along with her preserved annual pension. It also showed two immediate payments, her commuted annual compensation payment and her immediate lump sum compensation payment.

We believe that is exactly what she got, and that appeared to be confirmed in March this year on applying for her preserved pension, when she got a letter from Capita outlining the lump sum and annual pension she would receive.

No lump sum was paid by Capita however, and they now claim that she was paid the preserved lump sum in 2006.

We dispute that strongly - but have no way of proving it. Other than the Capita letters from 2006 (all kept) we don't have bank statements from that time (who keeps them that long?) - apparently the bank does not keep them that long either, they can only provide copies going back to 2007.

So Capita still insist she had three payments in 2006, we insist that was not the case and despite having the letters from them that appear to back that up they are, so far, not budging.

Anyone have any experience of this type of thing with Capita?

xylophone

The final record she has of correspondence at that time is dated two days before her redundancy date, and that (finally) shows her preserved pension as payable in 2014 along with her preserved annual pension. It also showed two immediate payments, her commuted annual compensation payment and her immediate lump sum compensation payment.

Assume the above is mistyped? You meant "preserved lump sum....."

What was the tax position concerning the "compensation payment" and the commuted "compensation payment"?

Do you have any tax records relating to these payments that would show the amounts?

Edmie

Have they confirmed how the payments where made?

If it was cheque or bacs you could try asking for a note of the bank details it was paid into/copy of any claim forms or a copy of a cashed cheque from there bank to call there bluff.

Stux

xylophone wrote: »

Assume the above is mistyped? You meant "preserved lump sum....."

What was the tax position concerning the "compensation payment" and the commuted "compensation payment"?

Do you have any tax records relating to these payments that would show the amounts?

Yes Preserved Lump Sum and Pension payment in 2014.

No tax records - compensation lump sum and commuted lump sum were both tax free, so that was not an issue.

They are just saying the preserved lump sum was paid - they are yet to show any evidence of this. We know a sum was paid of course - our recollection is that we were paid what their letter of 28 March 2006 (two days before it was due) said would be paid, the compensation lump sum + commuted compensation annual payment.

uknick

Stux,

Did she leave on flexible or compulsory terms?

Compulsory would have given her;

An immediate payment of pension and associated lump sum without reduction for early payment. Pensionable service enhanced by up to 6 ⅔years**, plus A lump sum compensation payment of the greater of (a) 6 months’ pay and (b) statutory redundancy

Flexible would have been;

An immediate payment of pension and associated lump sum without reduction for early payment. Pensionable service enhanced by up to 6 ⅔years

These quotes are taken from page 34 at this link;

http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCwQFjAA&url=http%3A%2F%2Fwww.parliament.uk%2Fbriefing-papers%2Fsn05201.pdf&ei=FMVsU9zMFsHnPLfngIgO&usg=AFQjCNFULSOUuMHrojRou1O61uX-g7zyCg

You mentioned a lump sum compensation payment. Was this the redundancy element of her package, i.e. 6 months pay? If so, it does appear Capita have got mixed up with the terms of her departure.

However, it was rare in 2006 for staff to leave on compulsory terms. I believe MoD boasted at the time only a handful left this way. If she left on flexible terms it would appear that she received the correct lump sum payments at the time and is not due another.

In my experience the civil service exit terms are particularly complicated and do lead to mistakes in understanding and/or payments by all parties involved.

Stux

Thanks uknick - you are correct in one thing, very complex and seemed to tie Capita staff in knots then and now, so what chance have 'normal' people got

However, what is clear that she did not appear to get either of these options in the manner described! I know, baffling - clearly, she did receive enhanced terms of just over six years pension - we can see that. My references to 'lump sum compensation payment' etc are taken straight from the paperwork we have from the time. This was not six months pay - it was treated in exactly the same way as her pension using the same calculation.

So her pension rights were enhanced by the six years, and that was used in the resulting calculations given to us by Capita.

BTW I'm fairly sure this whole thing was departure on compulsory terms, it was the Scottish Office who were responsible (now Scottish Executive) - she was working for a Scottish Office agency that they decided need to be moved to Inverness.

Initially, they kept saying "you qualify for an immediate compensation lump sum which is three times your annual compensation payment.... you get the annual compensation payment (which was exactly what she qualified for as a pension from 60) until you are 60. you will also get (immediately) a lump sum for your preserved pension (same as the compensation lump sum amount less 'widowers element'.).

Two things then happened - we kept querying the immediate payment of the lump sum for preserved pension, which we said should surely be paid on 30 April 2014 (her 60th).

Second thing was they offered the option of taking another lump sum instead of the annual compensation payment - we accepted that option.

Then just before payment day on 1 April 2006, they finally apparently accepted our point about the preserved lump sum as their letter to us on 28 March 2006 indicated two payments would be made on 1 April - the commuted annual compensation payment and the compensation lump sum. The same letter said that the preserved pension lump sum would be paid on 30 April 2014 along with the preserved pension.

Sorry for repeating myself, but based on what you say that does not appear to fit either option. Seems the whole things is a major league screw up - and not one of our making I'd add.

xylophone

BTW I'm fairly sure this whole thing was departure on compulsory terms, it was the Scottish Office who were responsible (now Scottish Executive) - she was working for a Scottish Office agency that they decided need to be moved to Inverness.

http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2013/01/29/nominister-2004-10.aspx

Is the above the agency in question?

You might try discussing the matter with the Pensions Advisory Service?

http://www.pensionsadvisoryservice.org.uk/when-things-go-wrong/internal-dispute-resolution-procedure

Stux

Thanks for that - and yes indeed, it was Scottish Natural Heritage my wife worked for. Strangely we refused to move to Inverness at the time - but by a quirk of fate, we moved north to Moray four years later (when I took my Civil Service pension early - I had no problems with Capita!)

I'll take a look at the advisory service.

uknick

As it was an agency they may have had their own rules on exit packages, no doubt based on the central civil service one. And this, no doubt, is confusing Capita. It doesn't take much in my experience.

You have the letter from 2006 saying you would get two payments in 2006, and only received two, i.e. the redundancy and commuted sum, and you would then get the tax free lump sum related to the annual pension. I suggest you tell Capita to re-read their own letter and prove to you when they paid the third payment as you have no record of it.

I assume they have been sent a copy of the letter you got in 2006 detailing the final payments.

xylophone

paid the third payment

As far as I understand it, there is no suggestion that a third payment has been made?

In 2006 when she left the Agency, she received two payments - one of these was a "compensation payment" (aka redundancy payment?) which was equal to three times enhanced pension, and the other an additional lump sum payment which represented the annual "compensation payments" she would have received up to age 60 (her SRA presumably).

This in itself strikes me as very odd- why was this not a simple matter of a redundancy payment and an immediate pension commencement lump sum and pension taken monthly as would be usual?

It also strikes me as odd that unless the other payment referred to above was indeed some form of pension commencement lump sum, tax would have been owed on it? (It would have equated to an advance payment of pension?)

Or I suppose it could have been regarded as a lump sum in lieu of staggered redundancy payments but these too could have been taxable?

Mrs stux was then expecting to draw her pension and a pension commencement lump sum in the normal way at age 60 - in fact there has been no lump sum and she is just receiving her pension?

uknick

I agree the arrangements seem odd and also contrary to the standard civil service exit packages available at the time.

But the OP is adamant three lump sum payments in total made up the exit package so who are we to disagree as we don't have access to the 2006 paperwork and agreement.

The OP says there should have been

a) a "redundancy" payment equal to 3 x her pension;
b) a lump sum representing the annual "pension" payments until she reached 60 and;
c) at the age of 60 her annual pension would start with a 3 x pension lump sum

He says she received a) and b) and is now waiting for c). Capita say all lump sum payments due were made in 2006. From the 2006 letter this implies Capita made three payments to meet the terms of the exit.

As I said, I think showing the referenced 2006 letter to Capita should resolve the issue. If the OP did get the terms wrong, one hopes Capita would take time to explain the misunderstanding after seeing the letter the OP has.