Pension and redundancy

HaydenB

Afternoon,

The company began the pension scheme in August. I was paying 1% and the company was matching it. The company then entered voluntary liquidation in mid-November as a company that owed us almost £1m went into administration.

I am still working for the same group of companies albeit under a different company and it has come to light (through a former employee) that the contributions deducted from our salary between August and November werent passed on to the pension company.

Obviously it is an awkward situation given I still work here but can anyone offer any advice?

HaydenB

Hi, can anyone help with this?

bowlhead99

Well, we can't really help as we don't know the details and are not close to the situation.

1) when you checked with the pension company about your contributions for last August to November, what did they say? Have they been received yet after a delay during the liquidation process, or was nothing ever paid in at all?

2) once you've found out the answer to (1), rather than it being hearsay from a former employee: as you still work for the same group of companies, what does your group HR dept say about the situation? Was it the intention that when they offered you a new role elsewhere in the group you would give up your entitlement to some element of the total pay and pension that you earned from August to November from your hard work in their fellow group company? Or if there has been a mistake or misunderstanding (particularly where it involves your deductions and not just their company contributions), how do they intend to remedy it to ensure you don't lose out? Perhaps by giving you additional contributions to your current scheme.

HaydenB

i havent contacted the pension company. My former colleague has forwarded on all emails that he has received from them. They have received zero from the deductions they have taken.

I appreciate the other questions you have asked and I will have to raise it - though my former colleague has asked me not to as yet whilst he continues to question. But the company has made no effort to explain to me or my other colleagues what is happening or even the fact that the August to November payments werent passed on (which they legally have to do before the 16th of the following month after taking the deduction).

atush

Just call the pension company yourself i the meantime and find out if your situation is the same. A least you will know your own situation, which may or may not be the same. You can also call the pensions regulator and ask them about your situation (once you have your details).

If you were a transfer into your new job, and the other companies use the same pension company, I suspect they will make the payments up.

If they dont, at least you will know to make sure they do things right this time. And will know having done your research what your options are.

PensionTech

I second the advice to call the Pensions Regulator. This is very definitely their domain and jurisdiction.

My hunch (and this is massively, massively speculative) is that the unpaid contributions will be treated as an unsecured debt of the company that went into liquidation, and so it will be settled according to its ranking in the wind up - which is to say, it's unlikely to be settled if the company didn't have enough to pay its own debts when it went into liquidation.

EDIT: As atush points out below, unpaid pension contributions are a preferential debt - this ranks below secured debt but above unsecured debt. So there is a better chance than I originally suggested.

The complication is that you are still working for the same group of companies. It's possible that there could be some arrangement by which the liability for those contributions is passed on to the parent company or other, depending on how the companies are structured. Even if not, the parent company (if any) or the related company you now work for may choose to make it up in a gesture of goodwill.

atush

i agree that the payments ma not have been made, but dont employee wages count higher than unsecured debt? If so, the pension contribs would as well- at least the employee bit.

PensionTech

Great tip - a bit of research suggests you're right. Below secured creditors, but above unsecured creditors as a preferential debt:

40.99 Contributions to occupational pension schemes as a preferential debt

A debt in respect of a sum due by the insolvent in respect of an employer’s contributions to an occupational pension scheme in the 12 months prior to the relevant date (see paragraph 40.98) or in respect of an employee’s contributions deducted but not paid into the scheme in the four months prior to the relevant date is a preferential debt.

bowlhead99

I'm just going to dangle a spanner in the works and suggest (not being a pension tech) that the legislation describes an "occupational pension scheme" written into trust by an employer where a debt is owed to the trustees of the scheme and the writers of the legislation wanted to make sure that pension scheme gets first refusal on the assets to settle those special debts to the pension plan, after the secured liabilities have been settled.

Without bothering to do any research on this myself, this presumably doesn't automatically extend to "group personal pensions", the pretty common method of setting someone up with a pension plan to receive the 1%s from the company?

In other words, the company was holding the staff deductions and also needed to pay its own share of the pension costs, but didn't before it ran out of money owing lots of other people too. So does such legislation cover all types of schemes? GPP sounds in principle not to be 'occupational', as it has 'personal' in the name, but I'm just thinking out loud.

As an aside, Pensiontech said "I second the advice to call the pensions regulator, it's their domain". But calling the regulator in the first instance seems a little hasty, obviously you need to find out the facts and what solution the current employer has for it if there is actually a problem.

HaydenB wrote: »

though my former colleague has asked me not to as yet whilst he continues to question.

If you have a concern I don't see that you should hold off and wait for the ex employee to question, as he requested of you:

He probably thinks he wants to sort out his situation as an outsider before the company gets a deluge of complaints from remaining staff and gives them all a sweet deal cutting him out. However...

- If he's right that the company are scoundrels and it's every man for himself, then don't wait for him, ask them independently about your own situation after you have checked with the pension company whose paperwork you probably have from when you signed up.

- If he's wrong and they are not scoundrels and it isn't every man for himself, then it will not matter that you contacted them before he finished his questioning.

PensionTech

Without bothering to do any research on this myself, this presumably doesn't automatically extend to "group personal pensions", the pretty common method of setting someone up with a pension plan to receive the 1%s from the company?

Mmm. Possibly so. But even then it sounds like an employee debt, like unpaid wages, which appears to be a preferential debt anyway.

As an aside, Pensiontech said "I second the advice to call the pensions regulator, it's their domain". But calling the regulator in the first instance seems a little hasty, obviously you need to find out the facts and what solution the current employer has for it if there is actually a problem.

I see your point - I'm not suggesting that the OP whistleblows immediately. Of course they should try to find out what's actually happened. But a word with TPR may point them in the right direction to get info and prepare for what might happen next. This is something they'll have dealt with before so they'll know more than we do.