Salary Sacrifice - Payroll dropped the ball

Pedro_1138

Hi,

Not sure if this is in the right place, mods please feel free to move if necessary.

Got an email regarding work pension this week, it seems that following an internal pensions audit, they've miscalculated for this current tax year, and potentially further back. They've based my Salary sacrifice on basic, and not taken into account any overtime.

I've had a polite whinge to the appropriate department and they've agreed that any historical shortfall i.e. pre 2019-2020 will be corrected and paid by them, but want me to make up this year's 5% shortfall, (for which they also owe their 3% on top). They're still looking into it, as there are probably several dozen affected employees at least, and have said that recovery will be done in small amounts so as not to affect income too heavily. That being said, I'm also going to assume it'll need to be corrected before the end of this tax year.

My issue with it is that this isn't my mistake. Should I stand my ground and say "nope, it's your mistake, you put it right" or do I roll over and say "fair enough, I'll pick up the tab"

As I'm contributing my pension through Salary Sacrifice, there are implications to my NI contributions as well, because this will also have been miscalculated.

Can anyone offer any insights?

Pete

Marcon

Based on the how the Pensions Ombudsman would respond to this...

Yes, it is their mistake, but you can only expect them to put you in the position you would have been in had they not made the error. That means if you want their extra contributions, you have to be prepared to pay whatever you should have paid/sacrificed had the thing been done correctly in the first place.

If the 'implications' in respect of your NI mean you have paid more than you would have paid if they hadn't made the mistake, they should pick up the tab for that.

eastcorkram

I contribute through salary sacrifice. I work overtime every week. My contribution is 25%, employer is 5%. This amount, the figure not the percentage, is the same every week, no matter how many hours overtime I work. So mine is clearly based on basic pay only. As I can clearly calculate on the payslip figures. I thought this was normal. Does it vary from scheme to scheme?

Marcon

eastcorkram wrote: »

I contribute through salary sacrifice. I work overtime every week. My contribution is 25%, employer is 5%. This amount, the figure not the percentage, is the same every week, no matter how many hours overtime I work. So mine is clearly based on basic pay only. As I can clearly calculate on the payslip figures. I thought this was normal. Does it vary from scheme to scheme?

Depends entirely how the salary sacrifice arrangement is set up. If OP's hourly overtime rate is permanently reduced by the % they wish to sacrifice (and it must be, for the salary sacrifice arrangement to work), then the amount would vary as overtime varies.

eastcorkram

Marcon
Confused now. You say it depends how it's set up. Mine is set up to salary sacrifice 25% of basic . Overtime makes no difference to the amount of money. I'm paid weekly, and the value of my overtime varies between say £60 and £200 per week. If that's how it's meant to be, that's fine. I don't want to backdate a one off payment of 25% of that. I've been in this scheme about 5 years. On the other hand , if the employer should have contributed 5% of my gross pay, rather than my basic , I'm happy for them to backdate that
I'll have a word with HR after Christmas.

Marcon

eastcorkram wrote: »

Marcon
Confused now. You say it depends how it's set up. Mine is set up to salary sacrifice 25% of basic . Overtime makes no difference to the amount of money. I'm paid weekly, and the value of my overtime varies between say £60 and £200 per week. If that's how it's meant to be, that's fine. I don't want to backdate a one off payment of 25% of that. I've been in this scheme about 5 years. On the other hand , if the employer should have contributed 5% of my gross pay, rather than my basic , I'm happy for them to backdate that
I'll have a word with HR after Christmas.

Look at the rules of your own scheme - there's no other way to know.

I was answering your query about overtime, which clearly applies to OP's arrangement.

BoGoF

Pedro_1138 wrote: »

Hi,

Not sure if this is in the right place, mods please feel free to move if necessary.

Got an email regarding work pension this week, it seems that following an internal pensions audit, they've miscalculated for this current tax year, and potentially further back. They've based my Salary sacrifice on basic, and not taken into account any overtime.

I've had a polite whinge to the appropriate department and they've agreed that any historical shortfall i.e. pre 2019-2020 will be corrected and paid by them, but want me to make up this year's 5% shortfall, (for which they also owe their 3% on top). They're still looking into it, as there are probably several dozen affected employees at least, and have said that recovery will be done in small amounts so as not to affect income too heavily. That being said, I'm also going to assume it'll need to be corrected before the end of this tax year.

My issue with it is that this isn't my mistake. Should I stand my ground and say "nope, it's your mistake, you put it right" or do I roll over and say "fair enough, I'll pick up the tab"

As I'm contributing my pension through Salary Sacrifice, there are implications to my NI contributions as well, because this will also have been miscalculated.

Can anyone offer any insights?

Pete

Surely you have some responsibility here to? It's not rocket science to calculate what should have been paid against actual and expecting free money is a bit much. It's hardly salary sacrifice if you don't give up the salary is it.

Pedro_1138

Thanks for the replies.

Since I posted there's been an update, and it's only for the current tax year since the minimum contribution guideline have changed, no figures as yet.

@BoGof - With regard to my responsibility, I'm going with no to be honest. I've been there 5 years, and while my basic has increased annually, so has the fixed sacrifice amount in line with it, just the same as @eastcorkram I pay a fixed amount, not a percentage.

I'm not expecting free money, what I expect is that a large company payroll department can do their job right. It's a certain fact that if I made a costly mistake like this I'd be for the high jump.

As far as my NI goes, I'm not expecting they'll cover that, it will all be recalculated in line with Mr Taxman's guidelines so indirectly I'll be putting that right through contributions from salary as normal.

At the end of the day, I'd be happy to take the hit against my pension for less having gone in this year, after all I can choose to pay the basic or add as much or little extra through extra payments direct to the external provider we use, what I'm objecting to is paying the price for someone else's ineptitude. As I said in my original post, I'm one of several dozen affected, and of the few close colleagues I've spoken to, we're all in agreement that it's out of order. Some guys have done triple the overtime I've done this year so far, they'll be hit much harder than me.

Thrugelmir

Pedro_1138 wrote: »

I'm not expecting free money, what I expect is that a large company payroll department can do their job right. It's a certain fact that if I made a costly mistake like this I'd be for the high jump.

Payroll departments have enough to do. Without the burden of a multitude of manual calculations every month. I’d expect your employer to clarify the scheme rules. Time costs money. Admin contributes nothing to the bottom line.

BoGoF

Keep your moaning up and they may decide salary sacrifice is not worth the hassle. It's not compulsory they offer it.