DB pension transferred, now they want some money back

NedS

JoeCrystal said:

Col349 said:

Am getting calculations and replies to questions in a few weeks time, so will ring Pension Advisory Service in that time and see what they say, will report back on any interesting information I receive in that time.

Well, that doesn't sound like a productive meeting! You would thought they had all the answers ready for your questions. The fact they are asking £40k instead sound like they made a real mess of it! I don't see why it should take weeks for answers to arrive. Are they doing the calculations on the abacus and sending the results by post?!   

I would think the longer it takes them, the better - it gives @Col349 more time to research, prepare and avail themselves of their rights which might be critical given the sums of money involved.

RetSol

I think that it would be worth the OP writing to Steve Webb at This is Money. He has a pension advice column and consults with experts in order to answer readers' questions.  This is an alarming situation and one which might well attract his attention as it will be of interest to his readers. 

kidmugsy

A friend told us that in the months prior to retiring, a DB scheme of which she was a deferred member wrote to her outlining what she could expect.  Then they wrote again to correct themselves.  Then ... : in all she got five letters with ever-decreasing amounts quoted.  Apart from hiring an actuary what could she have done to ensure that their final calculation was right?

(As is the case on this thread, the problem seemed to be centred on a transfer in she'd made long ago.)

JoeCrystal

Are there any stats on DB transfers in value and people? I am wondering if there are lot more demands and limited number of people to do the calculation and have to be done on a rush?

ex-pat_scot

Col349 said:

SoulSaver
The statute of limitations refers to errors in how much you are being paid ongoing as a pension, not to a DB transfer.
Is there somewhere I can point them to and show them this and say Look you can't do this?

Meeting today was interesting.  At first they were asking circa 60k, they said an error had been made and now are asking circa 40k!.  I didn't say much after that.
Am getting calculations and replies to questions in a few weeks time, so will ring Pension Advisory Service in that time and see what they say, will report back on any interesting information I receive in that time.
JamesD - passed 55 a few years back
Many Thanks for all the advice

That's indeed interesting. (and worrying for you, no doubt).
Your original post suggested they are seeking approx 20% of the TV back, and that your simplistic calculated "multiple" was 29x.
This was 3 years ago. I'm not sure if you are still working for this employer.
In round sums then, the original TV was £300,000 and your annual DB income foregone would have been roughly £10,500.
That would mean that the "correct" multiple would have been 23x, rather than 29x.  Not at all on the generous side, from the many anecdotes here and elsewhere. (acknowledging that taking a simplistic multiple approach ignores all sorts of benefit features of the DB).

I see a number of possible outcomes here, with the following comments:
1. The error may be enforceable /recoverable by the scheme
In this situation, you could either pay the cash, negotiate a reduced amount, or request that the transaction be cancelled since the basis upon which it was made was fundamentally incorrect.
The latter is likely preferable in this scenario. The regulator would expect you to be reinstated to the position where you suffer no financial loss or increased risk as a result of scheme's error. (It would be helpful to request a copy of the scheme rules, which should be clear on what restrictions or discretion are available to trustees and members.)
If you have incurred costs, then the scheme should reimburse these in full, as they are as a consequence of scheme error.
If you have had investment gain, then that's your good fortune not theirs. If you have had investment losses, then you could argue that the scheme should bear these as you would not have incurred them had the calculation been correct and your decision (to take the TV) would have been different.

2. If the transfer is cancelled and you are reinstated into the scheme with your former benefits restored.
In the 3 years since transfer, in general the TVs have increased as gilt yields have fallen.
You may be able to request a fresh TV once you are back in the scheme, but please check the scheme rules to confirm, as there may be restrictions if you are near scheme retirement date.
You may find that the fresh TV with correct figures has uplifted towards or actually beyond the (originally incorrect) £300,000.
You would still need to commission a pension transfer specialist to provide advice on the suitability of transfer.
You may wish to remain in the scheme. It would be your choice.
You might wish to point out the above informally to the scheme, to save them the considerable pantomime of admin, calculation etc and costs associated, if the outcome would be that you transferred back out on better financial terms.

3. There may be uncertainty on how enforceable this request is.
You'd rather avoid having to go through a legal process to establish this, I guess.
It becomes complicated if you are still working for the scheme sponsor, as there may be subtle pressure on you. You might need to get HR advice / support to ensure that trustee / scheme matters do not bleed into the sponsor company - they are separate entities with an arms' length relationship, and there should be no impact / pressure on your job / line manager etc if you are still working there.
The trustees have to request that the error is corrected. They would be negligent if they did not. However they do have discretion in exercising their duties, and the scheme rules should set this out. You can use this to your advantage.

4. what information is available?
This is asymmetric- they know far more than you. I would suggest perhaps a Data Subject Access Request be made from you to the scheme, for them to disclose all information they hold on file. This will assist you in the negotiations.

5. outcome and communication.
The trustees will not want to be seen to have made an error. It would not be good PR for them, nor the message that they are making mistakes and chasing for large repayments some years after the event. Be careful how you share your current status, until it is resolved. It would rather unsettle other scheme members.
They should be offering a Distress and Inconvenience gesture to you, as well as making good any costs or losses you have borne.
Take your time. They may try to drive the pace and the conversation. They cannot. 

RetSol

3. There may be uncertainty on how enforceable this request is.

I think that it is highly uncertain.  The OP has strong arguments on his side.

One question he can ask the trustees is what provision of the terms of the buyout are they are relying on to make the request.  Does the buyout agreement allow the trustees to claim back a sum in these circumstances? 

megacatt

As a long time lurker this has annoyed me so much that I'm actually posting.  
Are the discussions about possible mistakes a red herring?
I suggest that it's a simple contract (as was said above but I think that it needs reiterating).  They made an offer.  You accepted.  Contract made and end of matter.
Unless there's a relevant clause in the contract allowing clawback then it doesn't matter how they arrived at their offer.
If it was me I'd just say this (after checking the contract terms) and stick to that line.  I'd also mention compensation for distress and start notifying them of the time spent on this and your assumed hourly rate.

Even if they demonstrate to you that they made some error in the calcs that's irrelevant.  They could have arrived at the number by casting runes and multiplying that by their star sign.  It doesn't matter to you how they arrived at the number, they made an offer and you accepted.  Contract made, end of story (barring explicit terms allowing claw back).  

I'm no expert but there are other potential factors in arriving at a transfer value in any case, it is not always just an actuarial calculation.  The company may wish to change its risk profile or exposure and add to any calculated value to encourage people to leave for example.

soulsaver

Col349 said:

SoulSaver
The statute of limitations refers to errors in how much you are being paid ongoing as a pension, not to a DB transfer.
Is there somewhere I can point them to and show them this and say Look you can't do this?

The limitations would apply to an error, for instance, they offered £300k which you accepted. Then they paid £360k in error. That isn't what happened, is it?

If so they could be within their rights to ask for it back and the cited case law could be relevant.

Not "Oh, we offered you more than we should have in error.." which is what your post suggests is being said.
ETA: spelling

Col349

My draft for the second letter is getting longer with more questions gleamed for these posts

Still working for same company.

No they paid me what was offered, no more

I believe that it should be a straight Contract issue but have doubts if I cannot prove a previous case or something which states it is so.  But that is my attitude. I need to re-read the documents I signed and double check whilst waiting for the documents from them.

It does seem that this DB transfer / retiring  value thing is all a case of roll a few dice and take the average and normal laypersons have no way of checking if the value is correct without involving another wizard to check it for them.  Then why should you trust them either?

Thanks

Ganga

megacatt said:

As a long time lurker this has annoyed me so much that I'm actually posting.  
Are the discussions about possible mistakes a red herring?
I suggest that it's a simple contract (as was said above but I think that it needs reiterating).  They made an offer.  You accepted.  Contract made and end of matter.
Unless there's a relevant clause in the contract allowing clawback then it doesn't matter how they arrived at their offer.
If it was me I'd just say this (after checking the contract terms) and stick to that line.  I'd also mention compensation for distress and start notifying them of the time spent on this and your assumed hourly rate.

Even if they demonstrate to you that they made some error in the calcs that's irrelevant.  They could have arrived at the number by casting runes and multiplying that by their star sign.  It doesn't matter to you how they arrived at the number, they made an offer and you accepted.  Contract made, end of story (barring explicit terms allowing claw back).  

I'm no expert but there are other potential factors in arriving at a transfer value in any case, it is not always just an actuarial calculation.  The company may wish to change its risk profile or exposure and add to any calculated value to encourage people to leave for example.

Using your theory ,what would happen if the poster found out later that the calculations were wrong and he /she had been short changed by say £250k ? whats the answer ,contract made and accepted and end of matter ?