Any advice? Pension scheme claiming 12 years contributions/interest though opted out?

rjs200

Hi

I'm hoping somebody has an opinion on my situation/ any advice on how to respond initially and then proceed over the medium term.

M apologies for the length of this post- I've summarised my issue followed by my questions so people can avoid reading the detailed story.

SUMMARY OF SITUATION
I only started paying contributions January 2015 having opted out of the existing pension scheme upon starting with my employer in August 2002. In October 2008 I had considered opting back in (for the first time since August 2002): but at that time the scheme managers said they could find no service nor pension information for me: HR simply responded that- if I had opted out, all I needed to do was opt back in and bounced me back to the pension managers. Neither the pension managers nor the HR department at that time communicated to me that I might need to complete a formal opt out form (again). The scheme managers sent me election forms but in the end I did not submit. In January 2016- after 12 months of contributions both from myself and my employer (the only contributions in my 14 years of service)- I was contacted by scheme managers who said they could not elect me to the scheme due to various pieces of missing information from my employers. I queried this as I opted out in 2002 and completed the opt-in form in January 2015, and had been paying contributions monthly from my salary ever since. In a meeting with employer HR it has transpired that the pension managers are now saying I should have signed an opt-out form in late 2004 and that myself and my employer now owe them back dated contributions for 10 years 3 months . I'm at a complete loss as how to respond: a rough calculation would put this figure as 1.5x my current annual salary.


QUESTIONS

1. If you have never paid any contributions (for 13 years) then elect to what you believe is opting back into a scheme (you believe you opted out of) is it legal for the pension company to then demand 10 years 3 months of 'backdated' contributions from both you and your employer?
2. Is not the fact that no pension contributions were made by my Employer nor deducted from my salary- for 13 years- clear evidence that I did not want to participate in a pension scheme. No annual statements/ no deductions appearing in my monthly salary slip?
3. Is not the fact that I contacted both HR and the pension managers in 2008- clearly stating that I had opted out in 2002- further proof of this earlier opt out?
4. Also- in October 2008- should not either/ both the pension managers or my employers HR not flagged up the fact that- at that time they had no information on me so if I believed I had opted out I needed to compete a specific form (or provide one)? Neither of them provided me this information October 2008- and at worst I would have been in the same situation I am now but only 8 years earlier/ with far less to pay...
5. If there is a liability is it not the University who should pay for the error that TPS claim has taken place?

DETAILED STORY
In late 2002 I joined a northern university (ex poly) as a temporary research assistant on a small salary. I opted out of the pension scheme in place for that position (after noticing the deductions in my salary statement). I didn't give it much thought at the time other than emailing my HR to confirm I did not want to be a part of the existing pension scheme. I received an email confirmation at the time in 2002 I absolutely recall that. But I don't have that 2002 email now. I have changed jobs three times whilst working for this university and have had many email prunes over the subsequent 14 years. It was also confirmed by HR at this time that I could elect to opt back in at any time in the future. I cannot remember if I signed an official form or not (other than the email opt out) but I remember that after the one month's salary contributions they ceased and that deducted months contribution was refunded. So I am assuming I must have done for my membership of the scheme to have been halted.

In late 2004 I became a permanent member of the teaching staff. This was considered 'continuous employment' with terms and conditions remaining the same as my prior temporary research post. There was never any communication about pensions and I thought nothing of it as I had never made any contributions (I'd opted out in 2002) and this was a continuing position with same terms and conditions (just a slightly higher salary point). No pension deductions were made from my salary nor contributions from my employer. As with the previous research post.

In late 2008 I seriously considered opting back into the existing pension scheme. I contacted my HR who said if I had previously opted out I needed to opt back in- and proceeded to then direct me to the schemes managers. The scheme is the Teachers Pension Scheme which ex-Polytechnics use (as opposed to the University staff scheme). So I contacted TP scheme managers and received an email (which I still have) saying that no information nor details of my service record nor pension history could be found...but that if I had previously opted out I should complete a form to elect back in. I went back to HR about this- the issue of TPS having no information about me- but they just repeated the mantra that if I had opted out I needed to opt back in. In then end- partly because of all this hassle- I decided not to submit the form. To repeat at this stage absolutely no pension contributions had been taken other than that very first month's salary.

In January 2015 I finally decided to bite the bullet and decided to opt back in. I completed the requisite forms and passed them onto the HR pensions team. From the January 2015 salary run I have had employee pension contributions deducted and my employer has been making employer contributions. However I received no welcome pack nor information from TPS. I tried for several months to elicit this and eventually was met with a request for the original opt out form. I passed this onto HR along with my incredulity that instead of providing me with scheme information/ documentation they were asking for a form I submitted 15 years previously and asking HR to did this form out and provide it to them. I was told that they would sort it and get back to me. I heard nothing more from TPS nor HR and pension contributions continued to be deducted from my salary. I 'assumed' everything had been sorted between the two organisations.

In January 2016 I received online communication from TPS managers (I have a login, reference number and account with TPS online) saying they could not elect me from the scheme because three items of information had not been provided by my employers (they had not stamped nor addressed my election application; they had not provided an effective date of election; they had not provided the opt out form). I queried all of this with HR- given my opt out right at the start of my university service/ that fact that no contributions had been made by me or employer until I elected to opt back in January 2015/ that my service was deemed continuous from the first appointment/ that deductions had been taken once I signed and submitted the election form in January 2015.

Today April 14 2016 I have had the first formal meeting with HR.This is what they said:

1. That it transpires the original scheme I opted out of in 2002 was the Local Government pension scheme that covered research posts at that time;
2. That in any case they have no evidence I did opt out (though they admit that 1 months contributions were taken and then stopped);
3. That when I joined the permanent teaching staff in October 2004 I should have formally opted of the scheme that ran for lecturing positions- namely the Teachers Pension Scheme- despite nothing being communicated to me at the time of the need to consider whether I wanted to be a part of this different scheme or not and- more to the point no contributions having ever been deducted from my salary or made by the university on my behalf. If deductions had been made in October 2004 I would have done what I had done in September 2002 and asked HR why they had been taken and then opted out (again).
4. That in communications with TPS they are now demanding that both the university and myself pay backdated contributions to October 2004: 10 years and 3 months!
5. The main HR person (there were three of them) said repeatedly that "you should have completed a form back in 2004": this seems to be their line- that if 'we' are liable for the back dated contributions then they don't want to pay that element ascribed to myself. Even though I opted out of the existing pension scheme at my entry to university service and never paid a penny in contributions until I completed the forms to opt back in; and that in October 2008 I had discussions with them where they never raised any issue about prior opting out.

It's so frustrating! All I wanted was to opt back into the TPS and get 17 years of contributions in before I retired.

If anyone has any suggestions on what is/ is not feasible I'd greatly appreciate it.

kidmugsy

Most people would give their eye-teeth for years of contributions to a DB scheme like TPS. What is your objection - is it that you can't afford to pay their demands? Could you negotiate staged payments?

Would you prefer to consult a lawyer, and make the case that you owe nothing, and accordingly do not wish to be credited with those years of pensioned service?

As for the sorry performance of HR: par for the course I imagine. Such departments fill up with duds.

Is it true that when you took the second post that, unknown to you, you needed to opt out i.e. that becoming a member was the default option? Can HR demonstrate, using whatever Welcome Pack was given to employees at the time, that you were told that? (Wild guess: they can't.)

rjs200

There wasn't a welcome pack. I'd been an employee of the University for 3 years and had already been doing some teaching for the people who then offered me the full time teaching post. I'd been working on a research contract in that department- already had a desk. It was a case of "research contract ends on Friday; arrive at same desk on Monday for start the teaching contract". No welcome pack. No 'your pension arrangements have changed and the scheme is different you need to think about transfering your contributions' to which I would have said (a) what contributions and (b) no I dont want to be a member of the scheme at this time.

Obviously Ive got nothing against the scheme otherwise I would not have wanted to opt in and get 17 years plus AVCs under my belt prior to retirement!

I've been quoted bewteen 30 and 40k today by HR as a back dated payment: for a scheme I was never a part of and that they did not auto enrol me in as they were supposed to do in 2005. What they are saying seems to be that 'we did not enrol you and you should have not opted out'!

30 - 40k is not affordable, and would make me think about withdrawing from the scheme and abrogating my pension rights: which is actually what I think is the preferred outcome TPS are seeking to exact.

My question to people was: does anyone have any practical advice about how to deal with this situation?

kidmugsy wrote: »

Most people would give their eye-teeth for years of contributions to a DB scheme like TPS. What is your objection - is it that you can't afford to pay their demands? Could you negotiate staged payments?

Would you prefer to consult a lawyer, and make the case that you owe nothing, and accordingly do not wish to be credited with those years of pensioned service?

As for the sorry performance of HR: par for the course I imagine. Such departments fill up with duds.

Is it true that when you took the second post that, unknown to you, you needed to opt out i.e. that becoming a member was the default option? Can HR demonstrate, using whatever Welcome Pack was given to employees at the time, that you were told that? (Wild guess: they can't.)

hyubh

rjs200 wrote: »

I only started paying contributions January 2015 having opted out of the existing pension scheme upon starting with my employer in August 2002. In October 2008 I had considered opting back in

Why on earth did you opt out of first the LGPS than the TPS? Pension membership was a significant part of your overall renumeration package - LGPS employer rates for universities typically run at about 25% of pensionable pay. The TPS is less, but only because it's an unfunded scheme that runs on a cash accounting basis.

at that time the scheme managers said they could find no service nor pension information for me

Of course they couldn't, because you had opted out.

In a meeting with employer HR it has transpired that the pension managers are now saying I should have signed an opt-out form in late 2004 and that myself and my employer now owe them back dated contributions for 10 years 3 months . I'm at a complete loss as how to respond: a rough calculation would put this figure as 1.5x my current annual salary.

To be honest, the more membership you recoup from the dubious decision to opt out, the better. However, that doesn't mean you should stop being up in arms to Capita and your employer - rather, I'd suggest requesting (oh so reluctantly) an appropriate repayment plan. It's just a shame you can't retrospective get the LGPS membership make from where you were a lowly temporary research assistant - a Club transfer into the TPS would have been well worth your while.

If you have never paid any contributions (for 13 years) then elect to what you believe is opting back into a scheme (you believe you opted out of) is it legal for the pension company to then demand 10 years 3 months of 'backdated' contributions from both you and your employer?

Keep in mind TP/Capita are just the third-party administrator for the TPS, on behalf of the DfE...

Is not the fact that no pension contributions were made by my Employer nor deducted from my salary- for 13 years- clear evidence that I did not want to participate in a pension scheme.

No. In LGPS-land, depending on the nature of the employer it might be evidence that the employer doesn't want employees participating in the scheme. In TPS-land I wouldn't even semi-seriously suggest that however, since TP/Capita don't collect employer contribution details - instead, they just get each school/college/university to provide a declaration saying employer contributions overall have been deducted correctly.

No annual statements/ no deductions appearing in my monthly salary slip?

TP/Capita won't care...

Is not the fact that I contacted both HR and the pension managers in 2008- clearly stating that I had opted out in 2002- further proof of this earlier opt out?

Possibly.

If there is a liability is it not the University who should pay for the error that TPS claim has taken place?

Their missing contributions are already more than twice yours.

In late 2002 I joined a northern university (ex poly) as a temporary research assistant on a small salary. I opted out of the pension scheme

Oh dear...

I received an email confirmation at the time in 2002 I absolutely recall that. But I don't have that 2002 email now.

The LGPS and TPS are completely separate schemes, although both operated a form of auto-enrolment even before Auto-Enrolment legislation came in. If you opted out of one that says nothing about opting out of the other.

I have changed jobs three times whilst working for this university

Depending on the precise nature of these changes, they might have involved three separate potential pension memberships.

In late 2004 I became a permanent member of the teaching staff.

As you later report, this will have triggered eligibility for the TPS and therefore (according the the LGPS Regulations) ineligibility for the LGPS. The fact it was considered 'continuous employment' from the payroll side doesn't negate that.

So I contacted TP scheme managers and received an email (which I still have) saying that no information nor details of my service record nor pension history could be found...but that if I had previously opted out I should complete a form to elect back in.

Sounds fine from TP/Capita's point of view. Your employer took you as opted out, so didn't include you as a pension scheme member in their returns to TP/Capita. Ergo, you were not a member of the TPS from TP's point of view. However, this did not prevent them from doing an audit some years later and finding a discrepancy.

I went back to HR about this- the issue of TPS having no information about me- but they just repeated the mantra that if I had opted out I needed to opt back in.

Sounds like HR didn't appreciate the fact you had changed which pension scheme you were eligible for at one point.

In then end- partly because of all this hassle- I decided not to submit the form.

OK, so TP/Capita are blameless, from the standpoint of the service they are contracted to provide.

To repeat at this stage absolutely no pension contributions had been taken other than that very first month's salary.

TP/Capita won't care... and the fact they won't care is just how things are. Keeps the cost to the government (and therefore the taxpayer) down!

In January 2015 I received no welcome pack nor information from TPS. I tried for several months to elicit this and eventually was met with a request for the original opt out form. I passed this onto HR along with my incredulity that instead of providing me with scheme information/ documentation they were asking for a form I submitted 15 years previously

Under the rules of the scheme, eligible employees are enrolled by default, and have to explicitly opt out. The TP/Capita person who requested evidence that you had done so, therefore, was simply doing their job.

If anyone has any suggestions on what is/ is not feasible I'd greatly appreciate it.

As above, try and wangle a generous repayment plan. (Your 60-something self will thank you for it.)

hyubh

rjs200 wrote: »

Obviously Ive got nothing against the scheme otherwise I would not have wanted to opt in and get 17 years plus AVCs under my belt prior to retirement!

'Obviously?' It and the potential LGPS membership you threw away involved final salary benefits! Opting out when you were younger was precisely the wrong thing to do because it meant you lost the benefit of getting old service at a crappy rate of pay magically go against much higher pay from a later period, assuming some sort of career progression. Don't prolong the foolishness of your younger self by throwing away the chance to get back at least the earlier TPS period.

30 - 40k is not affordable, and would make me think about withdrawing from the scheme and abrogating my pension rights: which is actually what I think is the preferred outcome TPS are seeking to exact.

Forgot the conspiracy thoughts - TP/Capita perform the job they are contractually obliged to perform. They couldn't care less whether you decide to reclaim the membership or obstinately stand your ground, since their own income has absolutely nothing to do with scheme liabilities.

kidmugsy

rjs200 wrote: »

There wasn't a welcome pack. I'd been an employee of the University for 3 years and had already been doing some teaching for the people who then offered me the full time teaching post. I'd been working on a research contract in that department- already had a desk. It was a case of "research contract ends on Friday; arrive at same desk on Monday for start the teaching contract". No welcome pack. No 'your pension arrangements have changed and the scheme is different you need to think about transfering your contributions' to which I would have said (a) what contributions and (b) no I dont want to be a member of the scheme at this time.

Then your employer is in the wrong, I'd have said. But I've also said above "Most people would give their eye-teeth for years of contributions to a DB scheme like TPS." In other words, hyubh and I agree; it must surely be in your interest to see how you can manage to find that money, especially if they will let you stage the payments.

Come to think of it, if your employer is in the wrong shouldn't they lend you the money, and take it back from your wages over the next 17 years? Is there anyone in the university with the authority and intelligence to try to find a practical solution?

Lastly, has TPS provided you with the analysis that let them put a figure on the amount they want from you? A realistic calculation might mean that your buying some years of pension based on the smaller salaries of your youth might be much better value for you than paying based on your higher present and future salary.

rjs200

All you are doing in your posts is making judgemental comments on my decisions! You aren't making any practical suggestions other than 'pay Capita 50k' for a scheme I was never a member of!

To reiterate it very simply.

TPS dont care about pre 2005 so the LGPS is erroneous other than it was the only time myself and University HR had any communication about pensions oprior to 2002. They knew I had opted out of that scheme.

TPS claim I should have been autoenrolled by the universty. Had that been the case then deductions would have been made. Had *that* been the case I would have opted out on the required piece of paper that would have taken 15 seconds to fill out. But I didn't becasuse deductions were not made because the University did not enrol me.

So I have no idea at all why TPS expect me to pay backdated contributions to a scheme I was never a member of and not enrolled into- and therefore could not opt out of.

***

Anyway I can see now where this is going. Maybe it was the time of night that I posted or something.

I've read Pension Ombudsman determinations late this evening that have ruled against schemes whereby autoenrol could not be established and therefore the liability for past deductions was unprovable.

But I found that by myself.

It would have been nice if the two people who decided to spend their time responding had advised me to research there, rather than trolling me with their opinon of how stupid it is to opt out of a scheme!

rjs200

All you are doing in your posts is making judgemental comments on my decisions! You aren't making any practical suggestions other than 'pay Capita 50k' for a scheme I was never a member of!

To reiterate it very simply.

TPS dont care about pre 2005 so the LGPS is erroneous other than it was the only time myself and University HR had any communication about pensions oprior to 2002. They knew I had opted out of that scheme.

TPS claim I should have been autoenrolled by the universty. Had that been the case then deductions would have been made. Had *that* been the case I would have opted out on the required piece of paper that would have taken 15 seconds to fill out. But I didn't becasuse deductions were not made because the University did not enrol me.

So I have no idea at all why TPS expect me to pay backdated contributions to a scheme I was never a member of and not enrolled into- and therefore could not opt out of.

***

Anyway I can see now where this is going. Maybe it was the time of night that I posted or something.

I've read Pension Ombudsman determinations late this evening that have ruled against schemes whereby autoenrol could not be established and therefore the liability for past deductions was unprovable.

But I found that by myself.

It would have been nice if the two people who decided to spend their time responding had advised me to research there, rather than trolling me with their opinon of how stupid it is to opt out of a scheme!

PeacefulWaters

What outcome do you think is reasonable?

jamesd

You have a really interesting opportunity here but nobody seems to have mentioned it to you. Before I explain that here's a quick summary of a couple of possible options you might be after:

1. Things as they were if you'd opted out. No back contributions from you or your employer and it's just as if you had opted out originally. Seems like a reasonable idea if you really want it but you have a better option I'll discuss later.

2. Have your employer pay your contributions. I think that this isn't what you're seeking and you're unlikely to get it but you probably can get a loan to pay the back contributions over time if you want that.

On to the opportunity. You want to opt in for the future and did want to do that a year ago. They are offering you what appears to be a better deal. You can instead seek to have you treated as opted in originally and opt out now. Use the money not being paid in now to repay a loan from your employer to cover the missed original contributions.

The reason this is an opportunity is that it seems likely to get you more pension for your money because schemes have become less generous over time, in general, and your past years will be far cheaper than new years due to salary differences even without that other effect. Same net pay cost to you just more pension at the end because you get the extra years at less cost than using new contributions.

However, it really needs analysis and comment from people more familiar than I am with the finer details of the scheme and also needs details of just what you're being asked to pay - how close that gets to the fully adjusted cost vs the old cost.

One potential benefit of the old years is that they may have more generous retirement ages than now and that benefit might be preserved if you take them up on their offer instead of using new contributions.

It's an interesting situation with some potentially interesting capabilities if you do a quick mental switch from wanting never to have been opted in to seeing what benefit you can get from the screw up.

RickyB2000

You mentioned £50k, is this the contribution they expect from you specifically or is this the contribution they expect from you and your employer? If you and your employer, how much do they expect you to pay and is that before or after tax? It may be a tiny fraction of that figure if most of the contribution is from your employer.

I would then look at the return you would get for that payment and think about whether you would rather make the investment through some method or get things put back to the way they were originally.

i wouldn't rush into putting things back to the way they were without getting all the info and weighing up the cost benefit. A little hardship now may mean a more comfortable or even early retirement in the future