Employer taking £1,700 from my pay for backdated contributions

Susan20013

My employer consistently ignored warning letters from the Pensions Regulator, and failed to set up a pension scheme until November of this year. I immediately opted out of the scheme.
Today I received a letter say that the Pensions Regulator requires them to backdate their contributions for the 18 months that they failed to set up a scheme. They say that my contributions over that 18 months amounts to £1,700, and they are taking that total amount from my next pay! (I get paid £2,250 per month). They also enclosed replacement payslips for the 18 months concerned.

My problem is that not only does the deduction of £1,700 leave me unable to pay my rent, but it they had implemented the scheme as required, I would have immediately opted out – as I did when they finally started the scheme in Nov 2019.

I have checked the Pension Regulator online information and it seems to say that if an employer fails to take contributions from an employee they could “voluntary” pay it themselves. But that is the only reference I can find to this sort of problem.

Marcon

Give TPAS a ring: https://www.pensionsadvisoryservice.org.uk

Dazed_and_confused

I suspect you may ultimately get more responses focusing on your particular concern had you not said this,

I immediately opted out of the scheme.

spadoosh

Is this a letter from your employer or the pensions regulator?

Id tell your employer not to make the deduction. Because dependin on how they put it on and how their pension provider deals with it you might be unable to recover that amount well not until nearer retirement age anyway.

If theyre making the payment and setting you up as essentially a new pension from Nov, you should be able to 'opt out' with the pension provider and get the refund still.

If they enrol you from the original enrolment date youll pass any opt out dates and as such will be locked in so to speak.

The employer shouldnt put you in financial hardship for what is essentially their mistake. So at the very least they should b willing to come up with something of a payment plan for repaying the pension contributions over a longer of period of time. Ie id say it was more reasonable to take what is essentially double the pension provision over the next 18 months. To reclaim what shouldve been paid.


Have you rung the pension regulator/provider to get their input and or suggestions?

Susan20013

The letter was from my employer. I have asked for a payment plan and they claim that the Pensions Regulator insists that it is all paid immediately. My employer is an HNWI and uses an off-shore corporation to look after their business affairs. They are not exactly sympathetic, brushed off my concerns at receiving only 25% of my expected December pay and say it is "out of their control".

Susan20013

FYI the reason I have opted out is because I am almost 60, and have investments to look after myself in retirement (which I cannot access now).

atush

Still not a reason to give up free money.

I suspect the regulator wont be happy with how they are treating this situation, contact TPAS. You may have to make a formal complaint.

In the meantime, i'd be looking for another job. They sound dodgy.

green_man

They clearly shouldn’t be doing this. They can’t possibly think it’s acceptable to take 75% of your salary in one chuck like this. This would likely put you under the minimum wage for the month? You need to be very forceful with them and make it clear that you do not consent to them taking your salary.

One the other hand it would likely still be financially beneficially for you to join the pension scheme, in particular if the company is contributing to it.

Robert_McGeddon

IMO you can't opt out of something that hasn't started. Once you have been advised an employer scheme is starting you should then have the option to opt out.

But why would you? As green-man said, it would likely still be financially beneficially for you to join the pension scheme, in particular if the company is contributing to it. If you are a basic rate taxpayer the government top up your £1,700 by £425 to £2,125. Almost all auto-enrollment schemes have the employer contribute at least as much as the employee - so another £2,125, total £4,250.

You're over 55 so can access the pension pot in the very near future. If you can overcome the short term cash flow problem (by temp credit card spending, loan etc?) your £1,700 morphs into £4,250 (or perhaps more if the employer contributions are generous). Assumptions made, of course!

SonOf

Susan20013 wrote: »

FYI the reason I have opted out is because I am almost 60, and have investments to look after myself in retirement (which I cannot access now).

That is not a valid reason not to use join the pension. Pensions are just a tax wrapper. You say you are already investing and that means you are already using some tax wrappers (or unwrapped). The pension wrapper is quite probably the most tax efficient wrapper for you (more than ISA most likely) and the free money from the employer makes this better than any other investment wrapper.

Opting out is crazy and wasteful. A really daft decision.

Dox

Susan20013 wrote: »

The letter was from my employer. I have asked for a payment plan and they claim that the Pensions Regulator insists that it is all paid immediately. My employer is an HNWI and uses an off-shore corporation to look after their business affairs. They are not exactly sympathetic, brushed off my concerns at receiving only 25% of my expected December pay and say it is "out of their control".

The PR might indeed insist that employer contributions are made good immediately, and perhaps that an amount equal to the employee contributions should also be paid at once. The Pensions Ombudsman is very clear that where an employer (or pension scheme) makes an error, the individual affected should normally have at least the same length of time as the mistake persisted in which to pay their contributions. That means the employer certainly can't take the lot in one go.

Hopefully you took the good advice given on Friday afternoon and have already spoken to TPAS, who will have been able to confirm this.