Unauthorised pension payment

codge1960
codge1960 Posts: 4 Newbie
I took my company pension aged 50 back in 2010 as permitted by the Scheme Administrators. However, it has since been discovered that the Administrators should not of permitted this as I was not leaving my employment (as required by the law).


Since this error was discovered in June 2014 the Administrators have been working on a solution with the Pension Trustees which will have the "minimum impact" on me (and a fair number of other employees in the same situation). I have now been informed that a proposal is about to be put forward to resolve this.


Since this error was discovered the Administrators have made a ex gratia payment to me in lieu of the pension payment. As part of the proposal, the administrators are offering an interest free loan to me to pay back the payments I was paid in error. I do not have an issue with this but they are also including in this loan the ex gratia payments which I do not feel is fair or justified.


At no time have they stated these ex gratia payments were provided as a loan or that they had to be repaid. The regular update letters I received from my employer states "....The Scheme Administrators have confirmed that they will make a further ex gratia payment.....in place of the pension instalment which you would have been expecting from the Scheme....We have been asked by the Scheme Administrators to point out that this is still an ex gratia payment from the Scheme Administrators in relation to the pension payment made on a without prejudice basis and without admission of liability on the part of the Scheme Administrators or any other person..."


As I understand it an 'ex gratia payment' is a voluntary payment or 'gift' paid out compassion or compensation. Can anyone advise if I can refuse to pay these ex gratia payments back?
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Comments

  • System
    System Posts: 178,077
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    If it's the Scheme Administrator's fault surely they should bear the entire cost of rectifying their mistake, paying any penalties or whatever is involved?
    They have professional negligence insurance presumably.
  • agarnett
    agarnett Posts: 1,301 Forumite
    edited 30 April 2015 at 10:07AM
    Er ... this is surely rather special?

    How did your company and the Trustees get persuaded to do this - and you said several other members are in the same situation ?

    I am assuming this must be a DC scheme ?

    If it is a DC scheme and always has been, then a typical set up may mean there are three parties other than the members themselves:
    • The employer
    • The Trustee (whose directors are probably officers of the employer)
    • The Administrators (who are probably also the provider/insurance company/fund platform)
    Or is it more complicated than that?

    Edit: Oh ... and silly me, let's not forget that if there was a major initiative in 2010 which set this all up for several of you, then it is likely that external advisors / IFAs? were involved, and if not the instigators, surely the facilitators?

    Are there any active or deferred members of the same scheme ?
  • xylophone
    xylophone Posts: 44,139
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    The Administrators made these payments from their own financial resources rather than those of the Pension Scheme?
  • My opinion exactly but I am told I would ne liable to pay the tax at 55% on the tax free lump sum l received!
  • It is actually a DB scheme which always allowed members to take it at 50 and continue to work. Apparently the law changed in April 2010 but the Scheme Administrator failed to notice until June 2014!!
  • Yes that is correct. The payslips I have are entitled Unregistered Pension Scheme
  • agarnett
    agarnett Posts: 1,301 Forumite
    edited 30 April 2015 at 2:05PM
    Then I think I wouldn't mind being in your position on this one ;)

    Happily all the 50 year olds are now 55 so the cost of providing you with a second bite of the cherry to follow the generous tasters you've had for the past 5 years should be easy to calculate :p

    To unravel the mistake, I imagine they first need to recalculate where you'd be if you had not taken the pension (and that might in fact be in a better place relatively speaking than in 2010?)

    The cost of rectifying that sounds like what is owed to the scheme by the negligent administrators. That to me sounds like an actionable thing by your employer against the administrators, although I suppose it depends whether there were any in house persons e.g. legal counsel and FD who were dictating the continuing pace. The administrators might start by saying they were under instructions by the Trustee - and that may be complicated if any of the trustee directors were beneficiaries of this over generous ill-advised arrangement!

    I would expect that now the mistake is out, then the scheme must not be prejudiced for a moment longer than necessary and that the administrators are indeed the people being leaned on to fix that!

    And then at leisure (yours if not theirs, :rotfl:) there is the tricky question of how or even if they (the administrators) can somehow tempt you to pay some back for the past 5 years :D

    I hasten to add that mine is a completely lay opinion and I have no legal training whatsoever ...
  • jamesd
    jamesd Posts: 26,103
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    Were you working with the same employer and eligible to be a continuing member of the scheme from age 50 to now if you had not been told that you could take the money at age 50? What loss have you suffered, if any, in lost employer pension contributions and additional pension accrual for the extra years? Who is planning to pay for this loss?
  • xylophone
    xylophone Posts: 44,139
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    It is actually a DB scheme which always allowed members to take it at 50 and continue to work. Apparently the law changed in April 2010 but the Scheme Administrator failed to notice until June 2014!!

    Indeed - http://www.thepensionstrust.org.uk/NR/rdonlyres/F5BEFE9E-5839-4C25-B844-CCA1E4731E45/0/TPTPensionsBulletinFactSheet11009FINALVERSION.pdf

    "Please note that some members may have a ‘protected pension age’ (see below) – so will still be able to
    retire from age 50 – provided they have finished work"
  • xylophone
    xylophone Posts: 44,139
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    Yes that is correct. The payslips I have are entitled Unregistered Pension Scheme

    You mean that the ex gratia payments made by the Administrators are shown as above?
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