Pension Contribution Refund

Matt3818

Hi all,

Firstly, I know practically nothing about pensions so please bear with me. I joined a company at the start of 2021, I think my pension was set up around Feb 2021 and is administered by a company called Mercer. For personal reasons, I decided to put 20% of my salary into my pension as voluntary contributions, with the company putting max 8% in. I left this company last month and for personal reasons I just wanted to get my contributions refunded and close this pension down. I am aware I will probably lose all employer contributions as well as getting taxed and having to pay NIC costs etc. I don't care about this.

I checked online to see if this was possible and I'm seeing plenty of websites saying if you've been in a pension plan for less than 2 years, you should be able to get the plan closed and contributions refunded, and even in some circumstances, you can do this if you've been in a pension plan for up to 5 years. I requested this from Mercer and after making me wait double their 20 day response time, they have simply sent me a letter saying the government changed the law in 2015 making this no longer possible. This is at odds with every pension advice website I'm seeing online!

Would anyone be able to advise me if what they are saying is correct please?

Additional info: I'm 39, the pension is/was a salary sacrifice scheme, I'm not sure if this affects anything, I would assume not as they will just tax you on exit to make up for any benefits gained prior. Their letter basically says come back when I'm 55? I just don't understand if they're trying to fob me off, or have misunderstood my request (which was clear).

Thanks in advance.

JoeCrystal

Nope, you do not get refunds from DC pension schemes. There are some cases when you get the refunds from DB pension schemes but it sounds like your scheme is DC so yes, they are correct. Tough luck I am afraid but that is the way it is.

Tommyjw

30 days for money purchase schemes i#'m afraid, see ~"Defined contribution workplace pensions section at   https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/getting-your-pension-contributions-refunded

Linton

Return of contributions if you leave within 2 years applies to DB  ("final salary" ) pensions when you dont get any benefits until you have been employed for that period of time.  Therefore return of contributions is appropriate.

In your case it would appear you have a DC pension where there is a pot of money maintained for your benefit. Since that pot of money still exists and you are entitled to benefit from it in due course there is no 2 year refund of contributions option.

See explanation and confirmation here:
https://www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/getting-your-pension-contributions-refunded

What you should be able to do is to transfer the pension elsewhere, for example to your current employer's pensions scheme.  Also note that the age from when one can take money from a pension is increasing to 57 in 2028.

Matt3818

Hi guys, thanks for the replies and links, I appreciate the help, at least I now know the difference between DB and DC!

What a blunder that was! I guess i'll stick to 8% max in future.

Albermarle

You have no choice but to keep the pension. The info you have seen on line relates only to Defined Benefit/Final salary schemes, mainly confined to the public Sector nowadays.

What you can do if you want is easily transfer the pension to another similar one. Presume you will have another pension when/if you get a new job.
Mercer can be a pain/slow to deal with, as you have found out, so maybe better for the future to transfer it away from them.
The Moneyhelper site linked above is a good general info source about all aspects of pensions, so as you said  I know practically nothing about pensions , it would be worth a read through. 

Brie

Matt3818 said:

What a blunder that was! I guess i'll stick to 8% max in future.

I'd say it wasn't really a blunder as you've saved a nice chunk towards your future and get to keep the employer portion as well.  Transferring, as others suggested, into your new employer's scheme should be relatively straightforward and may be the most efficient as they may have much lower (or non existent) fees than a private pension somewhere else.  I've not done much in AVCs in a work scheme myself (income too low so not affordable) but have always set my contribution level when it could be varied to max the amount that the employer would also contribute.  

It used to be that you could get a refund from a DC but lost the employer portion which is one of the reasons I think that the rules changed.  Also you could transfer it to keep the E'er portion but it had to be done much quicker than many schemes were able to manage so a lot of errors were made.

Nebulous2

Matt3818 said:

Hi all,

Firstly, I know practically nothing about pensions so please bear with me. I joined a company at the start of 2021, I think my pension was set up around Feb 2021 and is administered by a company called Mercer. For personal reasons, I decided to put 20% of my salary into my pension as voluntary contributions, with the company putting max 8% in. I left this company last month and for personal reasons I just wanted to get my contributions refunded and close this pension down. I am aware I will probably lose all employer contributions as well as getting taxed and having to pay NIC costs etc. I don't care about this.

I checked online to see if this was possible and I'm seeing plenty of websites saying if you've been in a pension plan for less than 2 years, you should be able to get the plan closed and contributions refunded, and even in some circumstances, you can do this if you've been in a pension plan for up to 5 years. I requested this from Mercer and after making me wait double their 20 day response time, they have simply sent me a letter saying the government changed the law in 2015 making this no longer possible. This is at odds with every pension advice website I'm seeing online!

Would anyone be able to advise me if what they are saying is correct please?

Additional info: I'm 39, the pension is/was a salary sacrifice scheme, I'm not sure if this affects anything, I would assume not as they will just tax you on exit to make up for any benefits gained prior. Their letter basically says come back when I'm 55? I just don't understand if they're trying to fob me off, or have misunderstood my request (which was clear).

Thanks in advance.

As you've discovered being refunded isn't possible, however if I'm reading this correctly you wouldn't have anything to refund. With salary sacrifice the money is all employer contributions......

Dazed_and_C0nfused

Nebulous2 said:

Matt3818 said:

Hi all,

Firstly, I know practically nothing about pensions so please bear with me. I joined a company at the start of 2021, I think my pension was set up around Feb 2021 and is administered by a company called Mercer. For personal reasons, I decided to put 20% of my salary into my pension as voluntary contributions, with the company putting max 8% in. I left this company last month and for personal reasons I just wanted to get my contributions refunded and close this pension down. I am aware I will probably lose all employer contributions as well as getting taxed and having to pay NIC costs etc. I don't care about this.

I checked online to see if this was possible and I'm seeing plenty of websites saying if you've been in a pension plan for less than 2 years, you should be able to get the plan closed and contributions refunded, and even in some circumstances, you can do this if you've been in a pension plan for up to 5 years. I requested this from Mercer and after making me wait double their 20 day response time, they have simply sent me a letter saying the government changed the law in 2015 making this no longer possible. This is at odds with every pension advice website I'm seeing online!

Would anyone be able to advise me if what they are saying is correct please?

Additional info: I'm 39, the pension is/was a salary sacrifice scheme, I'm not sure if this affects anything, I would assume not as they will just tax you on exit to make up for any benefits gained prior. Their letter basically says come back when I'm 55? I just don't understand if they're trying to fob me off, or have misunderstood my request (which was clear).

Thanks in advance.

As you've discovered being refunded isn't possible, however if I'm reading this correctly you wouldn't have anything to refund. With salary sacrifice the money is all employer contributions......

Spot on, it doesn't sound like the op has actually been contributing to a pension in the first place.

Overall they'll be pleased about in 20+ years when the time comes to reap the benefits of the salary sacrifice 😊

Matt3818

Jesus what’s with all the judging? You don’t know me or my circumstances, why would you make a comment about me not having a pension in the first place? If you really must know, i’ve got 6 pensions including a generous Nat Grid pension, all totalling £600k. Like I said, personal reasons both ways, the most obvious being I have more than enough cash on hand anyway, and I can live comfortably on 4/5th’s salary, I wanted to wind it down as it’s one less pension to keep track of or consolidate and I don’t care about tax implications. It was just a simple query answered promptly by some helpful people, can’t you just live your life without trying to pointlessly criticise strangers and make clueless judgments? 😂

Albermarle

Matt3818 said:

Jesus what’s with all the judging? You don’t know me or my circumstances, why would you make a comment about me not having a pension in the first place? If you really must know, i’ve got 6 pensions including a generous Nat Grid pension, all totalling £600k. Like I said, personal reasons both ways, the most obvious being I have more than enough cash on hand anyway, and I can live comfortably on 4/5th’s salary, I wanted to wind it down as it’s one less pension to keep track of or consolidate and I don’t care about tax implications. It was just a simple query answered promptly by some helpful people, can’t you just live your life without trying to pointlessly criticise strangers and make clueless judgments? 😂

If you had given sufficient details about you situation in the first place you would have got more targeted answers.
Most new posters asking questions like yours do not have the back up of other large pensions. As you said this  I know practically nothing about pensions - it is not so surprising that people leapt to the conclusions they did.