Pension contributions refund 20 years late

WMW101

Hi, 

I was enrolled in a company pension scheme more than 20 years ago and left the company before completing 2 years of employment. The contributions that I made should have been refunded at that time. However they weren't and now 20 years later the Pension scheme has contacted me offering me a refund of those contributions. 

The question is, is this acceptable? It was an error on behalf of the pension scheme that resulted in the contributions not being refunded at the time, if invested over 20 years the value of these contribution would be significantly greater than their original value, which I have now lost out on due to their error.

Can anyone advise if I have a right to receive a greater value than the original contribution value, how that would be deduced, and how I can address this matter?

elouise01582

Is the only option a refund of contributions? I ask as I recently came across a case where this had occurred and the choice they had was to transfer the monies to another pension plan - the value of what was available had been calculated by actuaries to ensure that the member of the scheme didn't lose out?

dunstonh

The question is, is this acceptable? It was an error on behalf of the pension scheme that resulted in the contributions not being refunded at the time, if invested over 20 years the value of these contribution would be significantly greater than their original value, which I have now lost out on due to their error.

Its an error from them and an error from you.
Normally when you leave within 2 years of a DB scheme, they offer you a refund of contributions or a transfer to a pension of your choice.  They ask you to let them know.       
What it seems has happened is that you never told them and they were sitting there waiting for you and no-one picked it up that you had not replied to them.

Can anyone advise if I have a right to receive a greater value than the original contribution value, how that would be deduced, and how I can address this matter?

You have no right to anything additional.  Although the scheme may consider a goodwill gesture if you expressed your dissatisfaction.   However, some of the blame comes down on your shoulders too.

Silvertabby

Will they add interest for late payment?

xylophone

Are you currently a member of a pension scheme?

Is a transfer in a possibility?

Or a transfer to a pension you open yourself?

nigelbb

The OP needs to be reinstated into the position they would have been in if the return of contributions or transfer to another pension scheme had been offered at the time. As there is no possibility of retrospectively transferring into another pension scheme the only equitable solution is for the company to honour a pension based on the contributions. 

Linton

nigelbb said:

The OP needs to be reinstated into the position they would have been in if the return of contributions or transfer to another pension scheme had been offered at the time. As there is no possibility of retrospectively transferring into another pension scheme the only equitable solution is for the company to honour a pension based on the contributions. 

Do we know that a return of contributions or transfer was not offered at the time?

Marcon

dunstonh said:

The question is, is this acceptable? It was an error on behalf of the pension scheme that resulted in the contributions not being refunded at the time, if invested over 20 years the value of these contribution would be significantly greater than their original value, which I have now lost out on due to their error.

Its an error from them and an error from you.
Normally when you leave within 2 years of a DB scheme, they offer you a refund of contributions or a transfer to a pension of your choice.  

That wasn't the case 20 years ago, or at least not usually. The only option was a refund of personal contributions (minus tax), unless the rules provided the option of a deferred pension.

nigelbb said:

The OP needs to be reinstated into the position they would have been in if the return of contributions or transfer to another pension scheme had been offered at the time. As there is no possibility of retrospectively transferring into another pension scheme the only equitable solution is for the company to honour a pension based on the contributions. 

Depends what the rules say. If (as I suspect) the only option was a refund of contributions, then that's what should be offered now. If the scheme was entirely at fault, then the 'equitable' solution would be to offer an interest payment on top of the contribution refund.

dunstonh

That wasn't the case 20 years ago, or at least not usually. The only option was a refund of personal contributions (minus tax), unless the rules provided the option of a deferred pension.

It was frequently offered 20 years ago.  Especially in the public sector.  Indeed, we had one back in the late 90s.

Marcon

dunstonh said:

That wasn't the case 20 years ago, or at least not usually. The only option was a refund of personal contributions (minus tax), unless the rules provided the option of a deferred pension.

It was frequently offered 20 years ago.  Especially in the public sector.  Indeed, we had one back in the late 90s.

Public sector possibly; private sector hardly ever - and OP was in a company scheme, so clearly this is private sector.

sparky0138

As others have said, definitely look into transferring if you can. My mum was offered £953 refund with no mention of transferring but when she enquired she received a transfer value of £8509.