Aegon Salary Sacrifice error

mattparrett

Hi, my company runs a salary sacrifice pension scheme with Aegon. Up until October 2021 Aegon had been applying the pension relief tax to my own contributions despite it being a salary sacrifice scheme. This has overstated my pension pot. My company was made aware, it is a personal scheme so they couldnt see the accounts to know what was going on, and the wrote to all employees and told them that Aegon would be correcting the schemes. I was expecting to see my pot go down but nothing has happened as yet. How far back can Aegon go with the corrections? Should I raise a complaint with the pensions ombudsman?

manetti

Out of interest, if you have received tax relief that shouldn't have been applied and which will now be corrected, what would be the subject of your complaint? 

mattparrett

Coming up to retirement age means employees are basing whether or not they retire on overstated funds. You are that it shouldnt affect it as employees were ont entitled to it in the first place but it could mean those coming up to retirement now cant afford to.

Pat38493

From similar topics that came up in other threads, it seems like unfortunately there is no legal entitlement to get something you never should have got in the first place, even if you made decisions based on it.  The best you could hope for if you complain is a small compensation amount, but nothing like the amount that was wrongly credited, and possibly zero.

As an aside, it probably says something about the general understanding of employees about their pensions that not a single employee of the company noticed this for some time - for how long was it going on?

zagfles

I suspect it's your company's fault rather than Aegon, they probably didn't tell them the contributions were all employer contributions, as they are if it's sal sac.

dunstonh

Up until October 2021 Aegon had been applying the pension relief tax to my own contributions despite it being a salary sacrifice scheme. 

Aegon will do whatever they are told.  If the employer puts employer contributions into the employee contributions box then they will act on that.

How far back can Aegon go with the corrections?

From inception.

Should I raise a complaint with the pensions ombudsman?

Do you have concerns that your employer is pulling a fast one?   (after all, it is your employer that has made the mistake and it would be them you are complaining about)

Coming up to retirement age means employees are basing whether or not they retire on overstated funds. You are that it shouldnt affect it as employees were ont entitled to it in the first place but it could mean those coming up to retirement now cant afford to.

Now that the employer has owned up to the error, it wouldn't take more than 10 minutes to find out how much you are going to be affected by this. Final month payslip for each year will show the employee contribution level for that year.    That lets you know how much tax relief there was and you can deduct that total from the balance.   It won't be 100% accurate due to investment returns but it will give sufficient ballpark understanding.

As an aside, it probably says something about the general understanding of employees about their pensions that not a single employee of the company noticed this for some time - for how long was it going on?

Or maybe those that did kept quiet as they were hoping nobody noticed.

Altior

Thoughts were, who gets the investment growth on the overpayments, and you should expect to get some fees refunded (albeit unlikely to be huge, you'll want to ensure that they are received). 

Marcon

Altior said:

Thoughts were, who gets the investment growth on the overpayments, and you should expect to get some fees refunded (albeit unlikely to be huge, you'll want to ensure that they are received). 

You should be put in the position you would have been in had the error not occurred.

Altior

Indeed, but in this case there has (presumably) been investment growth funded by the taxpayer, in effect. Via HMRC. The excess must go somewhere, so whom should receive it. It's more of a rhetorical question, as I don't know the answer, but it could be that this is left in the pots of the individuals who received the overpayments (and the OP will actually get some residual benefit out of the error). 

Pat38493

dunstonh said:

Up until October 2021 Aegon had been applying the pension relief tax to my own contributions despite it being a salary sacrifice scheme. 

Aegon will do whatever they are told.  If the employer puts employer contributions into the employee contributions box then they will act on that.

How far back can Aegon go with the corrections?

From inception.

Should I raise a complaint with the pensions ombudsman?

Do you have concerns that your employer is pulling a fast one?   (after all, it is your employer that has made the mistake and it would be them you are complaining about)

Coming up to retirement age means employees are basing whether or not they retire on overstated funds. You are that it shouldnt affect it as employees were ont entitled to it in the first place but it could mean those coming up to retirement now cant afford to.

Now that the employer has owned up to the error, it wouldn't take more than 10 minutes to find out how much you are going to be affected by this. Final month payslip for each year will show the employee contribution level for that year.    That lets you know how much tax relief there was and you can deduct that total from the balance.   It won't be 100% accurate due to investment returns but it will give sufficient ballpark understanding.

As an aside, it probably says something about the general understanding of employees about their pensions that not a single employee of the company noticed this for some time - for how long was it going on?

Or maybe those that did kept quiet as they were hoping nobody noticed.

dunstonh said:

Up until October 2021 Aegon had been applying the pension relief tax to my own contributions despite it being a salary sacrifice scheme. 

Aegon will do whatever they are told.  If the employer puts employer contributions into the employee contributions box then they will act on that.

How far back can Aegon go with the corrections?

From inception.

Should I raise a complaint with the pensions ombudsman?

Do you have concerns that your employer is pulling a fast one?   (after all, it is your employer that has made the mistake and it would be them you are complaining about)

Coming up to retirement age means employees are basing whether or not they retire on overstated funds. You are that it shouldnt affect it as employees were ont entitled to it in the first place but it could mean those coming up to retirement now cant afford to.

Now that the employer has owned up to the error, it wouldn't take more than 10 minutes to find out how much you are going to be affected by this. Final month payslip for each year will show the employee contribution level for that year.    That lets you know how much tax relief there was and you can deduct that total from the balance.   It won't be 100% accurate due to investment returns but it will give sufficient ballpark understanding.

As an aside, it probably says something about the general understanding of employees about their pensions that not a single employee of the company noticed this for some time - for how long was it going on?

Or maybe those that did kept quiet as they were hoping nobody noticed.

Maybe I’m confused but my interpretation was that Aegon had treated the contributions as RAS and doubled up the tax relief.   If the contributions had been treated as net correctly, what difference would it make on the Aegon side whether it was classed as employer or employee?  In my salsac scheme my contributions as labelled “employee” but the amount is correct I.e. Aegon are not adding any tax relief on their side.

Marcon

Pat38493 said:

dunstonh said:

Up until October 2021 Aegon had been applying the pension relief tax to my own contributions despite it being a salary sacrifice scheme. 

Aegon will do whatever they are told.  If the employer puts employer contributions into the employee contributions box then they will act on that.

How far back can Aegon go with the corrections?

From inception.

Should I raise a complaint with the pensions ombudsman?

Do you have concerns that your employer is pulling a fast one?   (after all, it is your employer that has made the mistake and it would be them you are complaining about)

Coming up to retirement age means employees are basing whether or not they retire on overstated funds. You are that it shouldnt affect it as employees were ont entitled to it in the first place but it could mean those coming up to retirement now cant afford to.

Now that the employer has owned up to the error, it wouldn't take more than 10 minutes to find out how much you are going to be affected by this. Final month payslip for each year will show the employee contribution level for that year.    That lets you know how much tax relief there was and you can deduct that total from the balance.   It won't be 100% accurate due to investment returns but it will give sufficient ballpark understanding.

As an aside, it probably says something about the general understanding of employees about their pensions that not a single employee of the company noticed this for some time - for how long was it going on?

Or maybe those that did kept quiet as they were hoping nobody noticed.

dunstonh said:

Up until October 2021 Aegon had been applying the pension relief tax to my own contributions despite it being a salary sacrifice scheme. 

Aegon will do whatever they are told.  If the employer puts employer contributions into the employee contributions box then they will act on that.

How far back can Aegon go with the corrections?

From inception.

Should I raise a complaint with the pensions ombudsman?

Do you have concerns that your employer is pulling a fast one?   (after all, it is your employer that has made the mistake and it would be them you are complaining about)

Coming up to retirement age means employees are basing whether or not they retire on overstated funds. You are that it shouldnt affect it as employees were ont entitled to it in the first place but it could mean those coming up to retirement now cant afford to.

Now that the employer has owned up to the error, it wouldn't take more than 10 minutes to find out how much you are going to be affected by this. Final month payslip for each year will show the employee contribution level for that year.    That lets you know how much tax relief there was and you can deduct that total from the balance.   It won't be 100% accurate due to investment returns but it will give sufficient ballpark understanding.

As an aside, it probably says something about the general understanding of employees about their pensions that not a single employee of the company noticed this for some time - for how long was it going on?

Or maybe those that did kept quiet as they were hoping nobody noticed.

Maybe I’m confused but my interpretation was that Aegon had treated the contributions as RAS and doubled up the tax relief.   If the contributions had been treated as net correctly, what difference would it make on the Aegon side whether it was classed as employer or employee?  In my salsac scheme my contributions as labelled “employee” but the amount is correct I.e. Aegon are not adding any tax relief on their side.

In a salary sacrifice scheme, contributions are sometimes (albeit incorrectly) labelled as 'employee' on payslips etc. What matters is what the pension provider thinks they are.

Employer contributions are always paid gross, and that's not how Aegon has treated them - here they think (for whatever reason) they are employee contributions.