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Pension Tax Issue

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Hi There 
I have just found out that my employer hasn't taken the correct employee contribution from me for my workplace pension and hasn't applied for tax relief and not sure what to do.

I was auto enrolled to the workplace pension in Oct 14 when my employer set it up. There were a few issues between the pension supplier and my employer and in July 17 they transferred us to a new pension supplier. A few members of staff started to notice some issues in the old pension and we then found out that our employer had applied the tax relief at source model setting our contributions at 0.8% instead of 1% with the other 0.2% being added as Tax relief by the pension supplier. 
The problem is the pension provider never offered tax relief at source and only operated a Net pay tax relief model. ie you make the full 1% and your employer claims the 0.2% back in tax relief on your behalf.
I advised my employer of the issue who's only advise was that it was a personal pension, nothing to do with them and speak to the pension provider. The pension provider advised that it was not there issue, they applied the contributions they were told to make by my employer and that they don't offer tax relief at source so it down to my employer to make things right.


I don't know what to do to correct the issue. is it my employers issue to resolve? 
Is there away I can claim the tax relief and have it added to my pension?

any help or advise much appreciated.

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Replies

  • AlbermarleAlbermarle Forumite
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    Sounds like your employer has made a mess of setting up the pension wrongly .
    and only operated a Net pay tax relief model. ie you make the full 1% and your employer claims the 0.2% back in tax relief on your behalf.
    Just for the record that is not how a Net pay model works . The 1% is taken out before you pay tax , so there is noting to claim back either by employer or employee, as you have not paid any tax on it 
  • edited 9 July at 4:00PM
    JoeCrystalJoeCrystal Forumite
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    edited 9 July at 4:00PM
    That is odd, and I have some personal experience with a significant employer's tax relief issue on a few years in the row. Could you do an example of the pension contribution breakdown amount (EE / ER & and their percentage) on your payslip against the earnings and what appears in the pension transactions (EE / ER), that might make it more understandable? 
  • zagfleszagfles Forumite
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    Your employer needs to sort it out with the pension provider. If they're deducting pension contributions from you after tax (ie RAS) and the provider thinks they're net pay, this is a massive screwup by them.
    Just to confirm - check your payslips to confirm that pension conts are being taken after tax, ie is tax is worked out first then pension conts are taken off. You can check by how much the "taxable pay to date" goes up from one payslip to the next, if it's your total gross pay then your payroll is operating RAS, if it's total gross minus pension conts then they're operating net pay.

  • xylophonexylophone Forumite
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     Net pay tax relief model. ie you make the full 1% and your employer claims the 0.2% back in tax relief on your behalf.

    In "net pay" arrangement, there is no reclaim to make.

    Your pension contribution is taken from your salary before any tax is deducted.

    https://www.moneyadviceservice.org.uk/en/articles/tax-relief-and-your-workplace-pension

  • tyco99tyco99 Forumite
    4 posts
    First Post
    Thanks for the reply's.
    I have double checked the figures and an example is below of one of the months in question. 
    salary was £2500 before tax. my contributions £20 and employer contributions £25 and no tax relief added to pension pot. This was in October 2014 so both should have been contributing 1%
    I spoke to my employer again on Friday and they are adamant that its Pension providers fault (NOW pensions),I even pointed out that  NOW state on there website that they don't offer tax relief at source and this seemed to make them more amendment the issue was with NOW. 

  • edited 13 July at 11:45AM
    zagfleszagfles Forumite
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    edited 13 July at 11:45AM
    tyco99 said:
    Thanks for the reply's.
    I have double checked the figures and an example is below of one of the months in question. 
    salary was £2500 before tax. my contributions £20 and employer contributions £25 and no tax relief added to pension pot. This was in October 2014 so both should have been contributing 1%
    I spoke to my employer again on Friday and they are adamant that its Pension providers fault (NOW pensions),I even pointed out that  NOW state on there website that they don't offer tax relief at source and this seemed to make them more amendment the issue was with NOW. 

    There's 2 issues.
    1) The amount of employee contributions. That is probably within the minimum since it only needs to 1% of qualifying earnings, as above, not total earnings, I think this is earnings above the NI lower earnings limit. If this is wrong, it doesn't change your total remuneration, just that your pay would have been a bit higher and your pension a bit lower.
    2) The MORE IMPORTANT issue is whether you've got tax relief on your contributions. If the provider assumed net pay and your payroll assumed RAS, then you'll have missed out of tax relief. You need to check your payslips as per my previous post.

  • tyco99tyco99 Forumite
    4 posts
    First Post
    It would seem the contribution was on total salary not pensionable earnings.
    No tax relief has been claimed on my contributions this has been confirmed by both my employer and pension provider.
    but both say its the fault of the other and to speak to them to resolve.
  • edited 13 July at 3:20PM
    zagfleszagfles Forumite
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    edited 13 July at 3:20PM
    tyco99 said:
    It would seem the contribution was on total salary not pensionable earnings.
    No tax relief has been claimed on my contributions this has been confirmed by both my employer and pension provider.
    but both say its the fault of the other and to speak to them to resolve.
    With "net pay" there is no tax relief to "claim" by anyone! You get it by virtue of not getting taxed on the amount contributed. You need to check your payslips like I said for a certain answer. 

  • tyco99tyco99 Forumite
    4 posts
    First Post
    I understand, my pension contributions were after tax. I have been taxed on my contributions as my employer has said it was down to NOW pensions to arrange tax relief at source. NOW pensions said they only offer net pay.
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