Mis-information

Berty1212

I decided to consider taking voluntary redundancy in 2021 and asked the manager of my companies defined benefit (final salary) scheme what my pension would be at the time of me leaving work. The estimates they gave me in August 2021 were going to challenge me financially, but I decided to take the offered package. Subsequently I requested and received more estimates as the date for leaving had moved on a year. To my astonishment the estimates had reduced by circa £5000 per year. Had I been given these new estimates (the 2021 ones were incorrect as they had miscalculated the pension debit due to a divorce in 2011) I would probably not have accepted the offer. It also appears that they knew of the errors in 2021 but did not tell me or others at that time. Do you think I would have a claim against the pension management company?

dunstonh

 Do you think I would have a claim against the pension management company?

unlikely.

I helped someone in a similar situation who retired on the basis of incorrect pension information. They moved to a new area, bought a house and only found out the pension was wrong then they went to commence it.   it ended up with the ombudsman who, after 2 years, awarded £400 as inconvenience money as a mistake does not give entitlement.   £400 was a bit higher than the typical of the time as the husband died before the complaint outcome.

Malthusian

I would have thought some inconvenience money was due (as per dunstonh), especially if they could have informed you earlier but didn't. (How did you know they were aware of the errors?)
But proving a loss is difficult; the pension administrators will argue that if you could afford to give up your job on the incorrect figures (which you were never going to get), you can still afford to give up your job with a bit of part-time work to make up the £5,000pa difference.
Can you change your mind about taking voluntary redundancy? They've already kept you on for an additional year, would they keep you for longer?

Marcon

Berty1212 said:

I decided to consider taking voluntary redundancy in 2021 and asked the manager of my companies defined benefit (final salary) scheme what my pension would be at the time of me leaving work. The estimates they gave me in August 2021 were going to challenge me financially, but I decided to take the offered package. Subsequently I requested and received more estimates as the date for leaving had moved on a year. To my astonishment the estimates had reduced by circa £5000 per year. Had I been given these new estimates (the 2021 ones were incorrect as they had miscalculated the pension debit due to a divorce in 2011) I would probably not have accepted the offer. It also appears that they knew of the errors in 2021 but did not tell me or others at that time. Do you think I would have a claim against the pension management company?

Any complaint would, at least initially, be against the trustees of your DB scheme, although you can certainly include the administrators as being responsible.

If you did make a formal complaint, it would be on the basis of something known as a 'change of position' argument - i.e. you have changed your financial position to your detriment on the basis of incorrect information. To stand any chance of success, you would need to show that the change could not be reversed/made good; and that you could not reasonably have been expected to know the figures you were given were incorrect. That's quite a high bar - and even then, you might only be awarded fairly modest compensation for distress and disappointment. You don't have an automatic entitlement to any benefits in excess of those set out in the rules of the scheme, and the Pensions Ombudsman is reluctant to move away from that stance (on occasions the PO will do so, but it is very rare).

Probably worth going through your scheme's Internal Dispute Resolution Procedure - the administrators will be able to supply a copy if you don't have a scheme website from which it can be downloaded. 

Pat38493

Marcon said:

Berty1212 said:

I decided to consider taking voluntary redundancy in 2021 and asked the manager of my companies defined benefit (final salary) scheme what my pension would be at the time of me leaving work. The estimates they gave me in August 2021 were going to challenge me financially, but I decided to take the offered package. Subsequently I requested and received more estimates as the date for leaving had moved on a year. To my astonishment the estimates had reduced by circa £5000 per year. Had I been given these new estimates (the 2021 ones were incorrect as they had miscalculated the pension debit due to a divorce in 2011) I would probably not have accepted the offer. It also appears that they knew of the errors in 2021 but did not tell me or others at that time. Do you think I would have a claim against the pension management company?

Any complaint would, at least initially, be against the trustees of your DB scheme, although you can certainly include the administrators as being responsible.

If you did make a formal complaint, it would be on the basis of something known as a 'change of position' argument - i.e. you have changed your financial position to your detriment on the basis of incorrect information. To stand any chance of success, you would need to show that the change could not be reversed/made good; and that you could not reasonably have been expected to know the figures you were given were incorrect. That's quite a high bar - and even then, you might only be awarded fairly modest compensation for distress and disappointment. You don't have an automatic entitlement to any benefits in excess of those set out in the rules of the scheme, and the Pensions Ombudsman is reluctant to move away from that stance (on occasions the PO will do so, but it is very rare).

Probably worth going through your scheme's Internal Dispute Resolution Procedure - the administrators will be able to supply a copy if you don't have a scheme website from which it can be downloaded. 

Out of curiosity here - I could see that the argument would be, if they pay a higher amount to one pension just because of an admin mistake, this will be to the detriment of other pensions in the fund so this is not fair on them.

However - shouldn't the fund have some kind of insurance against that type of thing which would pick up the liability for the additional amounts, kind of like a doctor has to have insurance against mistakes?

I'm just wondering how we as customers can protect ourselves against such issues and what the advice would be there.  Most people are not qualified to know whether an estimate given to them is likely to be wrong or not, so I don't know what they consider as a reasonable expectation that you should know the figures were wrong.  I have a similar issue with some early retirement estimates that were given to me by my DB scheme - I have a feeling that they are too high, but I couldn't get a straight answer out of them when I challenged it - they then said "you are not 55 yet please contact us 6 months before you actually want to take the benefit", which then made me think that they don't have a good answer to my questions.

I guess the first thing would be to get several estimates over the course of several years and make sure they were consistent?

Berty1212

Malthusian said:

I would have thought some inconvenience money was due (as per dunstonh), especially if they could have informed you earlier but didn't. (How did you know they were aware of the errors?)
But proving a loss is difficult; the pension administrators will argue that if you could afford to give up your job on the incorrect figures (which you were never going to get), you can still afford to give up your job with a bit of part-time work to make up the £5,000pa difference.
Can you change your mind about taking voluntary redundancy? They've already kept you on for an additional year, would they keep you for longer?

Hi, thanks for that response. They told me there was a system error which is how i know they got it wrong.

Albermarle

Pat38493 said:

Marcon said:

Berty1212 said:

I decided to consider taking voluntary redundancy in 2021 and asked the manager of my companies defined benefit (final salary) scheme what my pension would be at the time of me leaving work. The estimates they gave me in August 2021 were going to challenge me financially, but I decided to take the offered package. Subsequently I requested and received more estimates as the date for leaving had moved on a year. To my astonishment the estimates had reduced by circa £5000 per year. Had I been given these new estimates (the 2021 ones were incorrect as they had miscalculated the pension debit due to a divorce in 2011) I would probably not have accepted the offer. It also appears that they knew of the errors in 2021 but did not tell me or others at that time. Do you think I would have a claim against the pension management company?

Any complaint would, at least initially, be against the trustees of your DB scheme, although you can certainly include the administrators as being responsible.

If you did make a formal complaint, it would be on the basis of something known as a 'change of position' argument - i.e. you have changed your financial position to your detriment on the basis of incorrect information. To stand any chance of success, you would need to show that the change could not be reversed/made good; and that you could not reasonably have been expected to know the figures you were given were incorrect. That's quite a high bar - and even then, you might only be awarded fairly modest compensation for distress and disappointment. You don't have an automatic entitlement to any benefits in excess of those set out in the rules of the scheme, and the Pensions Ombudsman is reluctant to move away from that stance (on occasions the PO will do so, but it is very rare).

Probably worth going through your scheme's Internal Dispute Resolution Procedure - the administrators will be able to supply a copy if you don't have a scheme website from which it can be downloaded. 

Out of curiosity here - I could see that the argument would be, if they pay a higher amount to one pension just because of an admin mistake, this will be to the detriment of other pensions in the fund so this is not fair on them.

However - shouldn't the fund have some kind of insurance against that type of thing which would pick up the liability for the additional amounts, kind of like a doctor has to have insurance against mistakes?

I'm just wondering how we as customers can protect ourselves against such issues and what the advice would be there.  Most people are not qualified to know whether an estimate given to them is likely to be wrong or not, so I don't know what they consider as a reasonable expectation that you should know the figures were wrong.  I have a similar issue with some early retirement estimates that were given to me by my DB scheme - I have a feeling that they are too high, but I couldn't get a straight answer out of them when I challenged it - they then said "you are not 55 yet please contact us 6 months before you actually want to take the benefit", which then made me think that they don't have a good answer to my questions.

I guess the first thing would be to get several estimates over the course of several years and make sure they were consistent?

I think I read on another thread, that if the scheme bring in new actuaries, that calculate in a different way, this can also bring about significant changes to pension offers. I do not think it can affect anyone retiring at Normal Retirement age, but it can affect how pensions are calculated for people retiring earlier than that,

sandsy

Albermarle said:

Pat38493 said:

Marcon said:

Berty1212 said:

I decided to consider taking voluntary redundancy in 2021 and asked the manager of my companies defined benefit (final salary) scheme what my pension would be at the time of me leaving work. The estimates they gave me in August 2021 were going to challenge me financially, but I decided to take the offered package. Subsequently I requested and received more estimates as the date for leaving had moved on a year. To my astonishment the estimates had reduced by circa £5000 per year. Had I been given these new estimates (the 2021 ones were incorrect as they had miscalculated the pension debit due to a divorce in 2011) I would probably not have accepted the offer. It also appears that they knew of the errors in 2021 but did not tell me or others at that time. Do you think I would have a claim against the pension management company?

Any complaint would, at least initially, be against the trustees of your DB scheme, although you can certainly include the administrators as being responsible.

If you did make a formal complaint, it would be on the basis of something known as a 'change of position' argument - i.e. you have changed your financial position to your detriment on the basis of incorrect information. To stand any chance of success, you would need to show that the change could not be reversed/made good; and that you could not reasonably have been expected to know the figures you were given were incorrect. That's quite a high bar - and even then, you might only be awarded fairly modest compensation for distress and disappointment. You don't have an automatic entitlement to any benefits in excess of those set out in the rules of the scheme, and the Pensions Ombudsman is reluctant to move away from that stance (on occasions the PO will do so, but it is very rare).

Probably worth going through your scheme's Internal Dispute Resolution Procedure - the administrators will be able to supply a copy if you don't have a scheme website from which it can be downloaded. 

Out of curiosity here - I could see that the argument would be, if they pay a higher amount to one pension just because of an admin mistake, this will be to the detriment of other pensions in the fund so this is not fair on them.

However - shouldn't the fund have some kind of insurance against that type of thing which would pick up the liability for the additional amounts, kind of like a doctor has to have insurance against mistakes?

I'm just wondering how we as customers can protect ourselves against such issues and what the advice would be there.  Most people are not qualified to know whether an estimate given to them is likely to be wrong or not, so I don't know what they consider as a reasonable expectation that you should know the figures were wrong.  I have a similar issue with some early retirement estimates that were given to me by my DB scheme - I have a feeling that they are too high, but I couldn't get a straight answer out of them when I challenged it - they then said "you are not 55 yet please contact us 6 months before you actually want to take the benefit", which then made me think that they don't have a good answer to my questions.

I guess the first thing would be to get several estimates over the course of several years and make sure they were consistent?

I think I read on another thread, that if the scheme bring in new actuaries, that calculate in a different way, this can also bring about significant changes to pension offers. I do not think it can affect anyone retiring at Normal Retirement age, but it can affect how pensions are calculated for people retiring earlier than that,

The actuaries should not calculate in a different way unless there is a rational reason for doing so. What sometimes happens is that new actuaries take over, read the scheme rules afresh and realise perhaps that the previous actuaries hadn't been applying the scheme rules correctly.

Malthusian

Pat38493 said:

However - shouldn't the fund have some kind of insurance against that type of thing which would pick up the liability for the additional amounts, kind of like a doctor has to have insurance against mistakes?

If a doctor chops both my arms off after I present with a headache, then I have a clear case for loss of earnings. If I voluntarily give up a job on the basis of incorrect pension figures, it would be very difficult to prove a loss, because there is nothing to stop me getting another job, or asking for my old one back.
If the correct figures had been given in the first place, I would either have carried on working, semi-retired and gone part-time, or retired and tightened my belt; all options are still available to me.
The cost to the doctor of my lost earnings claim will probably be five to six figures. The cost of an inconvenience payment to cover the latter scenario will likely be low three figures if that. Professional indemnity is unlikely to cover "distress and inconvenience" payments, all that would achieve would be to bump up your premiums by much more than the payout.
The OP has had a nasty shock but based on the information presented does not have a financial loss. The extra £5k never existed and doesn't count as a loss.

I'm just wondering how we as customers can protect ourselves against such issues and what the advice would be there.  

I guess the first thing would be to get several estimates over the course of several years and make sure they were consistent?

Yes, if you'd been reading annual statements or estimates you would likely have spotted the error in this case. Either the pension value wouldn't have fallen as it should after your divorce, or it would have unexpectedly gone up by the equivalent of however much was taken out by your divorce.
If you didn't notice the error, the loss of phantom income would be too small to make any difference to your retirement.

leosayer

Did the pension quote come with disclaimers eg. getting independent financial advice?

I sympathise with the OP. A simple mistake by a pension administrator can have massive consequences for an individual's life plans.

Marcon

Albermarle said:

Pat38493 said:

Marcon said:

Berty1212 said:

I decided to consider taking voluntary redundancy in 2021 and asked the manager of my companies defined benefit (final salary) scheme what my pension would be at the time of me leaving work. The estimates they gave me in August 2021 were going to challenge me financially, but I decided to take the offered package. Subsequently I requested and received more estimates as the date for leaving had moved on a year. To my astonishment the estimates had reduced by circa £5000 per year. Had I been given these new estimates (the 2021 ones were incorrect as they had miscalculated the pension debit due to a divorce in 2011) I would probably not have accepted the offer. It also appears that they knew of the errors in 2021 but did not tell me or others at that time. Do you think I would have a claim against the pension management company?

Any complaint would, at least initially, be against the trustees of your DB scheme, although you can certainly include the administrators as being responsible.

If you did make a formal complaint, it would be on the basis of something known as a 'change of position' argument - i.e. you have changed your financial position to your detriment on the basis of incorrect information. To stand any chance of success, you would need to show that the change could not be reversed/made good; and that you could not reasonably have been expected to know the figures you were given were incorrect. That's quite a high bar - and even then, you might only be awarded fairly modest compensation for distress and disappointment. You don't have an automatic entitlement to any benefits in excess of those set out in the rules of the scheme, and the Pensions Ombudsman is reluctant to move away from that stance (on occasions the PO will do so, but it is very rare).

Probably worth going through your scheme's Internal Dispute Resolution Procedure - the administrators will be able to supply a copy if you don't have a scheme website from which it can be downloaded. 

Out of curiosity here - I could see that the argument would be, if they pay a higher amount to one pension just because of an admin mistake, this will be to the detriment of other pensions in the fund so this is not fair on them.

However - shouldn't the fund have some kind of insurance against that type of thing which would pick up the liability for the additional amounts, kind of like a doctor has to have insurance against mistakes?

I'm just wondering how we as customers can protect ourselves against such issues and what the advice would be there.  Most people are not qualified to know whether an estimate given to them is likely to be wrong or not, so I don't know what they consider as a reasonable expectation that you should know the figures were wrong.  I have a similar issue with some early retirement estimates that were given to me by my DB scheme - I have a feeling that they are too high, but I couldn't get a straight answer out of them when I challenged it - they then said "you are not 55 yet please contact us 6 months before you actually want to take the benefit", which then made me think that they don't have a good answer to my questions.

I guess the first thing would be to get several estimates over the course of several years and make sure they were consistent?

I think I read on another thread, that if the scheme bring in new actuaries, that calculate in a different way, this can also bring about significant changes to pension offers. I do not think it can affect anyone retiring at Normal Retirement age, but it can affect how pensions are calculated for people retiring earlier than that,

Simply changing the early retirement factors (which can be done at any time and without notifying members) can have a major impact on early retirement projections. Factors are normally reviewed regularly (typically at least once every 3 years after a triennial valuation of the scheme has been concluded) and the actuary will advise on any suggested changes they feel necessary.

There is more than one way to calculate an early retirement pension so yes, a fresh pair of eyes can have an impact on how the calculation is performed. The requirements are to comply with legislation; the rules of the scheme; and to ensure a member receives 'fair value' and that, for obvious reasons, has a degree of subjectivity.