Redundancy at 55 - missed early pension

KennyScout

Asking for a friend:

Due to cost cutting measures she was recently made redundant from her job. The whole process was quite traumatic and she was barely supported by her employer or the union.

She was informed she would be made redundant a few weeks before her 55th birthday, and that her last day of work (given her minimum notice period) would be around 2 weeks after her birthday. At the time she was off sick from work and came in on request to receive this news.

Following being informed she worked a few more weeks and then asked to leave early due to the stress of situation. She asked to leave around 2 weeks before her birthday, which was accepted. She given a letter that said she would be paid in lieu of notice (11 weeks due to length of service).

Throughout the process her employer's representative stated that the redundancy would not affect her pension, despite her approaching 55, but they also stated that they were not pension advisers.

Having recovered from the stress of this situation she has recently tried to claim her pension, but has found out that a reduction is been applied due to early retirement, which would not be the case if she'd worked until 55. Copied from the pension fund website: "Your pension will be payable immediately (with no reduction for early payment) if you are made redundant or if you lose your job for business efficiency reasons when age 55 or over."

She was , falsely, under the impression that she had worked until 55 due to the payment in lieu of notice (which attracts NI deductions, but seemingly not workplace pension credits).

She was obviously poorly informed about her options, and it appears there was no discussion on the implications of PILON vs. gardening leave vs. actually working the notice period. Quite simply she did know the effect of leaving early, and did not know that PILON meant she was not "working" until 55.

In her contract of employment there is no mention of PILON or gardening leave only notice periods.

The questions
- Basically does she have any redress with the employer? Should they have informed her about her options regarding her notice period payments? And/or should the union have supported in this? Is their any argument that the stress of the situation meant she was not in a frame of mind to make these decisions (again the options were never presented, never mind discussed)?

thanks in advance!

Linton

I assume that she had a DB pension. In that case if you leave work early and start taking your pension there are 2 reductions on what would have happened otherwise:
a - because you are taking your pension for a longer time period than if you started at the normal date. This is known as the actuarial reduction.
b - because you are paying in for a shorter time and so accrue fewer years.


In redundancy situations it is common for (a) to be waived ("reduction for early payment") but not (b). Could this be what is happening in which case she has no redress?

KennyScout

From my understanding a) would waived only in the case she was made redundant after the age of 55, but as she turned turned 55 two weeks after her last working day and was not given gardening leave it is now been applied. Of course b) is being applied, this is expected.

xylophone

Was this an LGPS pension?

https://www.lgpsmember.org/tol/thinking-leaving-when.php

She might try a PM to Silvertabby who is expert on LGPS.

https://forums.moneysavingexpert.com/member.php?u=2533069

She might discuss her situation with TPAS.

https://www.pensionsadvisoryservice.org.uk/pension-problems/making-a-complaint

KennyScout

Indeed it's a LGPS We'll try Silvertabby, and maybe the TPAS if it's recommended!
Thanks!

Thrugelmir

KennyScout wrote: »

Throughout the process her employer's representative stated that the redundancy would not affect her pension, despite her approaching 55, but they also stated that they were not pension advisers.

Specific questions should have been addressed to the administrators of the pension scheme for clarification. Before voluntarily asking to leave early.

Silvertabby

If this isn't the LGPS, it's a scheme with very similar rules. This trend started a year or so before I retired - ie, redundancy before 55 whenever possible in order to 'save' the employer costs.

Sadly, unless the employer in this case is willing to extend the last day of pensionable service beyond age 55 then there's nothing anyone (including TPAS) can do. I can understand the employer's respresentative not being on the ball pensionwise, but there's no excuse for the union rep not knowing the difference between pensionable and non-pensionable pay.

How poorly is she? Could we be looking at some form of ill health retirement? Payment of ill health benefits from deferred status don't attract any enhancements, but benefits are paid without any actuarial/early payment reductions. Occ Health would have to confirm that the member is unfit for work - and likely to remain unfit for work - before SPA.


Crossed with OP confirming this is the LGPS.

KennyScout

Thanks Silvertabby! Indeed it's a LGPS. I think you've confirmed my suspicions that there is not much that can be done here. She's already approached her employer who wasn't willing to change the retirement date, even if the difference between PILON and Garden leave was not explained.

I suppose we could lodge a complaint with the union, but I doubt it would get us to far as quite simply she did not ask the right questions.

Regarding ill health, I don't think it would be possible, but it's good to know!

Thanks again,

atush

Oh dear. Had she known perhaps she could have stuck it out another 2 weeks.

The union SHOULD have pointed this out. They are aware of redundancy proceedures.

kidmugsy

atush wrote: »

The union SHOULD have pointed this out. They are aware of redundancy proceedures.

The only union I belonged to was useless on pension issues. Indeed on almost all issues. I was co-opted onto the branch committee only to find that we were unified mainly in our contempt for the union officers at HQ.

Brynsam

KennyScout wrote: »

Following being informed she worked a few more weeks and then asked to leave early due to the stress of situation. She asked to leave around 2 weeks before her birthday, which was accepted. She given a letter that said she would be paid in lieu of notice (11 weeks due to length of service).

Throughout the process her employer's representative stated that the redundancy would not affect her pension, despite her approaching 55, but they also stated that they were not pension advisers.

There are two very tiny glimmers of hope, although I fear SIlvertabby's answer is probably spot on, as usual.

If her contract has no provision for PILON, then using PILON is normally a breach of contract and the employer is normally on the hook for the value of any benefits which would have been payable/accrued had she worked her notice. This may (please note the weasel words) include building up pensionable service to the end of her notice period AND giving her the benefit of anything such as no actuarial reduction if that possibility had arisen during her notice period. The two snags here are that she asked to go early; and the employer may have made it clear that agreement was on the basis that she would receive PILON and her employment terminated on her last working day.

If the employer's representative repeatedly assured her that her pension would not be affected by her redundancy, that is clearly wrong. Her redundancy meant that she could draw her pension at 55 without any reduction for early payment.

I'd have thought those two lines or argument are worth advancing, although I don't for a moment believe there is a strong probability of success.

The union's performance can only be described as lamentable, but sadly not actionable.