Pension Contributions Credited to my Pension Fund

stksk8811

The amount of money 'not doing anything' averages to, around and about, a month's worth of contributions not invested over the year.

Not sure about this. If what my company are telling me is correct, I.E. they paid it at the end of the month to the pension fund, then each months investment (if you exclude the amount of time my company hold it for) is, on average, not invested for 13.75 days... (equates to 1 months worth of contributions not being invested for 165 days, or is that too simplistic way of looking at it?)

stksk8811

Admittedly, this doesn't equate to a whole hill of beans for an individuals, but for everyone..... 10's or 100's of millions of lost pounds a year..... well lost to the individual .... remember Superman III

Paul_Herring

stksk8811 wrote: »

Not sure about this. If what my company are telling me is correct, I.E. they paid it at the end of the month to the pension fund, then each months investment (if you exclude the amount of time my company hold it for) is, on average, not invested for 13.75 days... (equates to 1 months worth of contributions not being invested for 165 days, or is that too simplistic way of looking at it?)

I was using quite a bit of rounding, to get a rough ballpark number, and to explain my thinking - you're more than welcome to tweak it.

In your specific example, you'd multiply the result from my calculation by 165/365 (45%, say 50%, or half ) to get a lower number 'lost.'

And no - your thought isn't simplistic; the opposite in fact - it's removing some of the rounding I did.

Albermarle

There have been posters on the forum who have seen payments into their pensions delayed a lot longer than this , sometimes well past the 22nd deadline .
Usually smaller companies with poor admin/bosses who probably resent being forced to pay pension money . Although it is theoretically illegal there is not much can be done apparently.
So maybe if it gets paid by 22nd you should be thankful !

bowlhead99

stksk8811 wrote: »

Admittedly, this doesn't equate to a whole hill of beans for an individuals, but for everyone..... 10's or 100's of millions of lost pounds a year..... well lost to the individual .... remember Superman III

Basically if there's a 17 day delay each month as you suggest, then ALL of the pension contributions in the entire year are delayed by 17 days, losing you 17/365ths of a years worth of growth on the entire year's contributions.

In an example where you and your employer put in £5000 a year between you (e.g. 10% of a £50k salary or 20% of a £25k salary), every penny of the whole £5000 misses out on 17 days of growth. If the growth is 7%, the amount of growth lost il to this delay is 17/365 of 7% of £5000 which is £16.

Ask your employer for a £20 Christmas bonus and you'll be roughly back on track. Also, ask to be paid daily or weekly because getting paid only once a month causes you to lose out on savings interest or investment returns or the chance to pay off some of your mortgage earlier.

stksk8811

Ask your employer for a £20 Christmas bonus and you'll be roughly back on track.

But I don't think it's my company, in this case, if I believe what they are saying. Also, it not just me, it probably everyone in the company, neigh, everyone that pays into a pension to a greater or less extent.
Even if its just £5 per person per year and you multiple that up by the number of people the ONS say pay in pensions in this country, that several 100 million pound every year.

blue_eyes

Mine usually hits around 6th or 7th of month, occasionally 5th; though it doesn't display in the online dashboard until around 15th.

Here's a summary from 2003 of some ombudsman rulings (ignore first para for these purposes):
https://www.cms-lawnow.com/ealerts/2003/04/timescales-for-investing-pension-contributions-and-other-assets-2

e.g. The Ombudsman decided that this systematic delay of at least ten days was "an unnecessary and unreasonable delay which constituted maladministration causing injustice".

But the Ombudsman pointed out that this Pensions Act time limit was a date for identifying when criminal liability might be imposed (it is now also a civil offence). Its rationale was to safeguard what is essentially members' money from use by companies in financial difficulties. He said "the existence of such longstop sanctions does not absolve trustees or managers of their responsibility to ensure that good practices are established for all areas of pension scheme administration".

in another case
The Ombudsman ordered compensation for loss attributable to the delay beyond the target date of 5th day of each month after deduction. The employer and trustees were also directed to review their current practice to ensure they met their target.

JoeCrystal

Albermarle wrote: »

There have been posters on the forum who have seen payments into their pensions delayed a lot longer than this , sometimes well past the 22nd deadline .
Usually smaller companies with poor admin/bosses who probably resent being forced to pay pension money . Although it is theoretically illegal there is not much can be done apparently.

Looking at payslips and the pensions statements, after the auto-enrolment came into effect, we had amazingly irregular pension contributions. About first four months worth was all showing up over a week in the fifth month, and it varies a lot month by month. But it almost looks like it gets processed every fourth month with the previous three months' contributions. But finally, it settles down to having each contribution in the pension account two months after the payday (although it still varies between a fortnight early or late). And that is not even taken into account a significant issue with tax relief as well. Oh and getting the EE and ER wrong way around occasionally. :rotfl:

While my employer is not small, I think it is more of a poor understanding of workplace pension schemes and a weak administration. Indeed, I had to explain the pension issues repeatedly to HR teams and why it is an actual problem rather than just ignoring it. But it is getting better, slowly.

Frankly stksk8811, I think you are lucky with only three weeks late!

marlot

stksk8811 wrote: »

...
So for that 3+ weeks, that money is neither in my hands / bank account nor in my pension fund...

Actually the 'loss' is bigger and longer than that.

Most people are paid in arrears. So you work on the first of the month, but don't get paid until the end of the month. Similarly for the second of the month.

So not only is your pension contribution delayed, but also your salary.

It's legal. It's just the way the world works. Some employers were fairer and paid partly in arrears, partly in advance - I can remember being paid for the whole month on or around the 21st.

ffacoffipawb

Before I retired I was paid on the 25th of the month and the pension contribution (salary sacrifice) was usually in my Aviva Group Pension by the first working day of the following month. So usually a week after payday.