DB scheme winding up took over 14 years

DavidFx

My Father retired in 1992 aged 65 from his company's DB scheme. The company has since stopped trading. In 2000, the trustees announced the scheme would be wound up. Since then, there has been a succession of different trustees and administrators. In 2014, the scheme became insolvent and was taken over by the Pension Protection Fund/Financial Assistance Scheme.
He has now been informed that he has been overpaid by £14K - his pension has been cut from £10Kpa to £6.5Kpa.

The reason for overpayment is that his old scheme gave annual increments whereas the FAS does not for pre 1997 service.

Is this worth taking to the Pensions Ombudsman on the basis it took 14.5 years to sort out whereas current guidelines suggest 2 years?

ermine

Presumably you have already exhausted the PPF review process? You have to do that before going to the pensions ombudsman.

As to whether it's worth it, it depends on how much your father needs the 14k compared to the aggravation involved in chasing the payout. After all, to get it into perspective, if there were no PPF the cut in his pension would be 100%...

kangoora

I think it's outrageous. His father will be 88 now so it appears the PPF are trying to recoup this £14k over the next 4 years based on the fact they need to do it quickly before he pops his clogs (to put it bluntly).

The negative effect is of course a massive reduction in his pension through no fault of his father's.

Obviously the PPF have the right to reclaim overpayments but to impose such a draconian cut, based presumably on the fact of his age, seems ridiculous. I very much doubt, if his father was in his mid 70's, for example, they would impose such a short timeframe to recoup the cash.

It would seem more 'fair' for them to reduce his payments by £1k/year and for the PPF to hope he survives another 14 years.

Obviously 'fair' might not come into it and the recovery rate might be set by some formula but I think it would be worthwhile to ask for a review and challenge this.

DavidFx

ermine wrote: »

Presumably you have already exhausted the PPF review process? You have to do that before going to the pensions ombudsman.

I think my complaint would be against the previous pension scheme trustees - not the PPF.
The pension fund still had assets when it became insolvent - I think the trustees just threw in the towel.

atush

I would file a complaint asap.

And given the situation, it would have to be with the PPF. And hope for a longer period to repay.

jamesd

For what payment years are they saying he has been overpaid? If the FAS/PPF was only entered in 2014 then that's the time I expect their rules to apply and not earlier.

Rather than making an explicit complaint at this point, start by asking them which payment years are involved and why they think that the adjustment should apply to any payment years before they took over the scheme.

xylophone

"Are you saying that his pension was at the correct level when he entered the PPF? It was not the previous trustees who made an error?

http://www.pensionprotectionfund.org.uk/Pages/compensation.aspx

If You Have Retired
You will have been receiving a pension from your scheme before your former employer went bust.

If you were beyond the scheme’s normal retirement age when your employer went bust, the Pension Protection Fund will generally pay 100 per cent level of compensation, which means we will generally pay you the same amount in compensation when your scheme enters the PPF.

Your payments relating to pensionable service from 5 April 1997 will then rise in line with inflation each year, subject to a maximum of 2.5 per cent a year. Payments relating to service before that date will not increase."

Have you had a word with the Pensions Advisory Service?


http://www.pensionsadvisoryservice.org.uk/

DavidFx

jamesd wrote: »

For what payment years are they saying he has been overpaid? If the FAS/PPF was only entered in 2014 then that's the time I expect their rules to apply and not earlier.

Rather than making an explicit complaint at this point, start by asking them which payment years are involved and why they think that the adjustment should apply to any payment years before they took over the scheme.

The PPS have gone back to 2000 (the date of starting wind-up) and calculated his notional pension (similar to the amount he received in 2000) based on his asset share. Any increments since then have been removed and will need to be repaid. Effectively his pension has reverted to the year 2000.

I will ask the question jamesd has suggested

DavidFx

xylophone wrote: »

"Are you saying that his pension was at the correct level when he entered the PPF? It was not the previous trustees who made an error?

http://www.pensionprotectionfund.org.uk/Pages/compensation.aspx

If You Have Retired
You will have been receiving a pension from your scheme before your former employer went bust.

If you were beyond the scheme’s normal retirement age when your employer went bust, the Pension Protection Fund will generally pay 100 per cent level of compensation, which means we will generally pay you the same amount in compensation when your scheme enters the PPF.

Your payments relating to pensionable service from 5 April 1997 will then rise in line with inflation each year, subject to a maximum of 2.5 per cent a year. Payments relating to service before that date will not increase."

Have you had a word with the Pensions Advisory Service?


http://www.pensionsadvisoryservice.org.uk/

My father received increments until 2009 when he was told there were insufficient funds for further increments.
I will certainly ask the PPF why this has been backdated to 2000 and not when the fund was passed to the PPF
I will also contact the PAS
Many thanks to all those who have responded