Civil Service Pension Scheme Collapse

TheShape

I have to say upfront that I'm rather embarrassed to be posting this on this site as it has left me feeling a bit hopeless in trying to describe to someone in coherent terms why I believe they have abandoned all rational thinking and been taken in by someone talking absolute nonsense. I'm embarrassed also that someone close to me has not thought to engage their critical thinking skills.

Driving home from work a radio article on the news described the talks between The Pensions Regulator and Phillip Green regarding the Arcadia Group Pension deficit. This prompted my partner to ask if I'd heard about our Civil Service Pension Scheme. I said I hadn't heard about any new changes. She went on to explain:

An acquaintance who works for the DWP has been tasked with recovering moneys from employers who have been assisted by payments made from the DWP to help them with the costs of complying with and funding auto-enrolment schemes. Many of these employers have claimed this help from DWP and promptly disappeared . Apparently these payments to employers have been made from the Civil Service Pension Scheme and that failure to recover these funds puts the future of the Civil Service Pension Scheme in doubt.

I've explained that I wasn't sure that there was any fund available for employers to help fund auto-enrolment costs. Apparently it's a secret fund to ensure auto-enrolment rolled out and can be seen to be a success. I've explained that there isn't a pot of money that the DWP could dip into to fund this. Apparently there is. That it would appear a substantial fraud is occurring if the DWP was diverting pension contributions to a secret fund. Apparently this happens to pension funds all the time, witness people who lose their pension funds a la Robert Maxwell etc). That perhaps the person who told her this had spectacularly misunderstood the entire situation. Apparently it's rather arrogant of me to think I know better than someone who is doing the job of recovering these funds.

I've got a couple of options. One, to convince my partner with a reasonable explanation of how this has not been occurring and the reasons why it would not be possible that such a thing occurred. Or two, checking the guidance for Whistle-blowers so that this secret fund using money diverted from the Civil Service Pension Scheme, thereby risking it's collapse can be exposed.

Has anyone got a simple way of describing how the Civil Service Pension Scheme operates (I tried to explain it to her but do not appear to have done the best job of it) both so she understands how the scheme works and how then it is vanishingly unlikely that the scenario she describes has occurred.

Thanks and apologies (for posting this thread) in advance.

Thrugelmir

The Civil Service Schemes are unfunded. Pension benefits are paid from current employee and employer contributions.

TheShape

Thrugelmir wrote: »

The Civil Service Schemes are unfunded. Pension benefits are paid from current employee and employer contributions.

I explained that to her so I've got that covered.

I'm not sure if she believes those contributions were being secretly diverted to the secret auto-enrolment fund.

pennystretcher

"Many of these employers have claimed this help from DWP and promptly disappeared"

I couldn't find any funding help available for employer in the net either. Re: employers who could promptly disappear, I reckon this could refer to companies who have been participating to Civil Service Pension Scheme under Fair Deal agreement:

https://www.civilservicepensionscheme.org.uk/about-us/employers-admitted-under-fair-deal/

E.g. Carillion etc...maybe they have to find some funding for pension payments after the company collapsed?
https://www.ftadviser.com/pensions/2019/02/07/ppf-sets-end-date-for-carillion-assessments/


It is likely that the company would have held any pension contributions in a holding account before doing an annual payment to pension scheme end of the financial year...at least that's what happens with my scheme.. (LGPS DB scheme)

Marcon

TheShape wrote: »

Apparently these payments to employers have been made from the Civil Service Pension Scheme and that failure to recover these funds puts the future of the Civil Service Pension Scheme in doubt.

If she's as dim as she sounds, is it worth bothering trying to explain it to her? As others have said, there is no fund from which payments could be made, so the future of the CSPS is completely unconnected to these allegedly 'disappearing' employers.

You could suggest she gives TPAS a call and drives them demented trying to bash sense into her: https://www.pensionsadvisoryservice.org.uk

Or try https://www.which.co.uk/money/pensions-and-retirement/company-pensions/public-sector-pensions-explained/civil-service-pension-scheme-explained-ahkbz9d6t82f

TheShape

pennystretcher wrote: »

"Many of these employers have claimed this help from DWP and promptly disappeared"

I couldn't find any funding help available for employer in the net either. Re: employers who could promptly disappear, I reckon this could refer to companies who have been participating to Civil Service Pension Scheme under Fair Deal agreement:

https://www.civilservicepensionscheme.org.uk/about-us/employers-admitted-under-fair-deal/

E.g. Carillion etc...maybe they have to find some funding for pension payments after the company collapsed?
https://www.ftadviser.com/pensions/2019/02/07/ppf-sets-end-date-for-carillion-assessments/

That's interesting. A significant number of employers there.

She believed it was related to small employers who literally set-up a company, claimed the funds and promptly vanished.

Sometimes there is an actual scenario that someone has overheard someone else discussing and misunderstood/filled in the gaps etc and invented a scenario that was never reality but rooted in some truth.

AnotherJoe

You said there's options one or two. There's option three as well which is to let time take care of this when the scheme doesn't collapse .. though no doubt she'll come up with option four top secret payments to rescue it. I wouldn't waste your breathe.

hugheskevi

The obvious starting point is the Scheme Accounts, which do not document such payments and are fully audited by the National Audit Office.

You could try to explain that the Civil Service pension scheme is financed through funds voted by Parliament, and that expenditure must be within the Ambit of the voted funds. The Ambit clearly indicates the scope of the expenditure to be financed. The payments as described would not meet this requirement.

If that isn't enough, you could suggest that if DWP wanted to make payments to employers, it could do so itself such The Pension Service. Or it could use one of its pensions arms-length bodies. The Pension Regulator would be an obvious choice, or the Pension Protection Fund has very significant assets under management. Or the DWP has very close links with the Money Advice Service, Pension Wise and TPAS (now amalgamated into the single advice service) who could also all be considered if you wanted greater arms-length between DWP and the paying agency.

There are the logistical points to consider - if you want a secret fund, it probably isn't ideal to have HM Treasury vote funds to Cabinet Office to use in management of the Civil Service Pension Scheme to make payments on behalf of the Department for Work and Pensions. There would appear to be a lot of links in the chain for the secret to slip out. But if you did somehow manage to keep it all under wraps across 3 different Govt. Departments and all their Finance Divisions, you probably don't put staff to work on recovery payments who are free to blab about it to all and sundry.

I think the best approach is two-fold. Those believing in conspiracy theories will not accept a rationale answer, so be more cunning.

First, you should say that in the course of your investigations you have heard that DWP is resorting to use of the Official Secrets Act to silence loose-lipped staff, and the acquaintance really needs to be careful about what they say. After all, secret payments would be embarrassing, so clearly DWP would use whatever means necessary to silence anyone talking about them.

Second, say that it isn't the Civil Service Pension Scheme involved, but in fact the Local Government Pension Scheme. That makes far more sense, being local and closer to small companies, and also having an actual monetary fund to dip into. Counter a conspiracy-theory with a better one

TheShape

Marcon wrote: »

If she's as dim as she sounds, is it worth bothering trying to explain it to her?

Possibly not. It's why I don't enter into a discussion about the existence of ghosts with her. However, if we end up living together (after today's discussion I'm having my doubts) I would like her to have some understanding of her pension which will be partly funding our joint retirements.

JoeCrystal

hugheskevi wrote: »

The obvious starting point is the Scheme Accounts, which do not document such payments and are fully audited by the National Audit Office.

If I am reading this right, the contributions from the employers and employees only cover a third of the cost (£4 billion) with the HM Treasury making up the shortfall (£10 billion)? I think I need to find a new job in the Civil Service or the Local Government, that is my best shot at a comfortable retirement! :rotfl:

Dox

TheShape wrote: »

An acquaintance who works for the DWP has been tasked with recovering moneys from employers who have been assisted by payments made from the DWP to help them with the costs of complying with and funding auto-enrolment schemes. Many of these employers have claimed this help from DWP and promptly disappeared . Apparently these payments to employers have been made from the Civil Service Pension Scheme and that failure to recover these funds puts the future of the Civil Service Pension Scheme in doubt.

Apparently it's rather arrogant of me to think I know better than someone who is doing the job of recovering these funds.

I've got a couple of options. One, to convince my partner with a reasonable explanation of how this has not been occurring and the reasons why it would not be possible that such a thing occurred. Or two, checking the guidance for Whistle-blowers so that this secret fund using money diverted from the Civil Service Pension Scheme, thereby risking it's collapse can be exposed.

Option three: suggest she asks the 'acquaintance' to explain exactly what they will be doing.

Option four: you've had a lucky escape. Call it a day and go your separate ways. Every warning bell in the land would be ringing for me if someone behaved like this.