DB pension transferred, now they want some money back

Pat38493

I had not come across this thread before.  Another astonishing example of how DB pension providers can suddenly decide they've made a mistake months or years later and ask for their money back.

Surely at some point the FCA or the government or whatever needs to step in and change the law or regulations around this area so that these kind of documents are a contractual commitment (covered by insurance if necessary for mistakes rather than the individual member having to pay money back years later or pay expensive legal costs to fight the case).  The risk here should not be on the individual member who doesn't have the skill to interpret or re-calculate such matters.

af1963

I'm currently helping someone to sort out claiming a DB pension. The administrators have provided several wrong quotes - sufficiently wrong to be obviously wrong even without seeing the full calculations. They've also refused a request to "show their working", which we'd like to see as it's hard to have confidence in anything they calculate. 

Deciding what to do with a pension could be the single biggest transaction of your life - decisions about transfers or lump sums are potentially more than buying a house. Amazing that we're expected to do it on the basis of an unverified set of figures - and then, as in this thread, that the administrators can decide later that they got it wrong. 

Pat38493

af1963 said:

I'm currently helping someone to sort out claiming a DB pension. The administrators have provided several wrong quotes - sufficiently wrong to be obviously wrong even without seeing the full calculations. They've also refused a request to "show their working", which we'd like to see as it's hard to have confidence in anything they calculate. 

Deciding what to do with a pension could be the single biggest transaction of your life - decisions about transfers or lump sums are potentially more than buying a house. Amazing that we're expected to do it on the basis of an unverified set of figures - and then, as in this thread, that the administrators can decide later that they got it wrong. 

Out of interest how did you know they were wrong?  Was it because the amounts were wildly more or less than expected, or was it factual errors like length of service and suchlike?  

Regarding showing their workings - I have wondered about this as well - surely if you are a member of the scheme and it is your benefits at stake, they should have to show their calculations and workings on request.

Have you tried putting in a DSAR request under GDPR - since this estimate is information that they are holding about that person, they should be able to make a DSAR request and the provider has to respond within a month.

retroman62

Pat38493 said:

I had not come across this thread before.  Another astonishing example of how DB pension providers can suddenly decide they've made a mistake months or years later and ask for their money back.

Surely at some point the FCA or the government or whatever needs to step in and change the law or regulations around this area so that these kind of documents are a contractual commitment (covered by insurance if necessary for mistakes rather than the individual member having to pay money back years later or pay expensive legal costs to fight the case).  The risk here should not be on the individual member who doesn't have the skill to interpret or re-calculate such matters.

Couldn't agree more. Quite apart from anything else, if this were to prevail, there would never be certainty. Would individual members have to formulate their own budgets regarding living expenses etc against a contingent possibility that at some point in the future, they might have to pay some money back? It's not acceptable. 

Col349

Some interesting comments, Thanks
Update:  Still awaiting contact by Ombudsman.  They say they have extra resources and are hoping therefore to get through the backlog quicker.
I've still got the money so not concerned so far (not until I get a decision )
There is a time limit on the companies requesting the return of overpayments, think it's 6 years, but that is from when they should have realistically found the error (?)
As regards the IFA spotting the mistake.  There were no calculations supplied with the valuation and since the valuations can vary greatly it didn't seem extreme.
Will update again when Ombudsman gets in touch
Good luck

af1963

Out of interest how did you know they were wrong?  

Some errors in dates, some missing AVC funds and choices about how to take them, and some numbers that just didn't make sense - the latter probably just careless typos, but they appeared in documents that they wanted signed, and you don't really want your pension amounts to be calculated and communicated with such small regard for accuracy. 

Pat38493

af1963 said:

Out of interest how did you know they were wrong?  

Some errors in dates, some missing AVC funds and choices about how to take them, and some numbers that just didn't make sense - the latter probably just careless typos, but they appeared in documents that they wanted signed, and you don't really want your pension amounts to be calculated and communicated with such small regard for accuracy. 

So far as I can tell, there is little incentive to the organisations producing these pension estimates to get them right as there appears to be no financial penalty to them for sending out wrong information as they know they can just demand the money back later, and it’s presumably very difficult for the trustees to fire their pension administators and appoint different ones.

katejo

retroman62 said:

Any update on this case? I've read all the comments with interest from afar as someone who hasn't got the knowledge of pension law that many of the contributors here clearly have, but I would agree that your best approach, even now you've reached the Ombudsman level is, under How can this be put right section, to ask to be reinstated on the DB scheme on the basis of different choices potentially being made had the correct information been available at the time, if you are forced to repay the amount. 

I have to say irrespective of any wording in the CETV documents at the time, and irrespective of the obligations of Trustees not to overpay on a scheme, this seems to me to be an outrageous state of affairs. Good luck with the process - have to say having read some the Ombudsman's determinations, it doesn't exactly fill one with confidence .

Also interested to know because I am waiting for a projection quote on my DB pension.

af1963

it’s presumably very difficult for the trustees to fire their pension administators and appoint different ones.

It can't be that difficult. The current bunch are about the third or fourth different administrator tor this pension in the last 10 years.  But my suspicion is that the pension trustees choose administrators based on price rather than the quality of service provided to (mostly) ex employees. 

(A bit like the astronaut who said the scariest bit of going into space was when he realised he was sitting on top of a rocket built from a million different parts, all supplied by the lowest bidder.)

Pat38493

af1963 said:

it’s presumably very difficult for the trustees to fire their pension administators and appoint different ones.

It can't be that difficult. The current bunch are about the third or fourth different administrator tor this pension in the last 10 years.  But my suspicion is that the pension trustees choose administrators based on price rather than the quality of service provided to (mostly) ex employees. 

(A bit like the astronaut who said the scariest bit of going into space was when he realised he was sitting on top of a rocket built from a million different parts, all supplied by the lowest bidder.)

I guess it could be a bit the other way around - if they keep outsourcing their admin processes to other companies to save money, handovers may not be great.  If there is then no penalty for sending out wrong estimates....

I also have never worked in this business, but I do get a bit of an impression that when you request an estimate, the estimate you receive some time later is created by an "admin" person following a checklist.  If you then say - yes please I want my pension now, it's only at that stage that the information is looked at by the real experts who may or may not agree with the previous checklist based estimate.  I hope it's not like that because that is very bad for the members (customers?) but it feels like it.

The problem then is, once the pension is started being paid, it's probably impossible for you to say well, if I had known the pension would be significantly lower than what you originally estimated, I wouldn't have put it into payment yet, so I'd like to send you back the money you've paid me so far and re-defer the scheme.