Pension - Inland Revenue Limits - Class C member

Lawrence631

I was in an occupational pension scheme from 1985 to 2000 - 15 years’ service at 1/60 accrual rate.

I'm I correct in believing that:

(Q1) I was a "Class C member" due to joining the scheme before 17 Mar 1987?

(Q2)  As I completed over 10 years of service the Inland Revenue limit for my pension is 2/3rd of Final Remuneration at Normal Retirement Date?

(Q3) Does the 1/60th of Final Remuneration limit for each year of service apply to me (I only completed 15 years), or is this limit "trumped" by being a Class C member for over 10 years. The Scheme Rules do not include any mention of Class C members or rules relating to joining date pre or post 17 Mar 1987

hyubh

Lawrence631 said:

I was in an occupational pension scheme from 1985 to 2000 - 15 years’ service at 1/60 accrual rate.

I'm I correct in believing that:

(Q1) I was a "Class C member" due to joining the scheme before 17 Mar 1987?

(Q2)  As I completed over 10 years of service the Inland Revenue limit for my pension is 2/3rd of Final Remuneration at Normal Retirement Date?

Note: The rules of the scheme limit benefits to 1/60th of Final Remuneration for each year of service not exceeding 40 years or such larger amount that will not prejudice the approval under the scheme under the Income and Corporation Taxes Act 1988 Part XIV Section 1.

 (Q3) Does the 1/60th of Final Remuneration limit for each year of service apply to me (I only completed 15 years), or is this limit "trumped" by being a Class C member for over 10 years. The Scheme Rules do not include any mention of Class C members or rules relating to joining date pre or post 17 Mar 1987

This is pretty much the same question as you raised in one of your previous threads. Your use of the present tense is all wrong - not only is the tax legislation you're asking about no longer in effect, there is no 'Inland Revenue' either (it got merged with another body to form HMRC in the mid-noughties).

Marcon

What exactly are you trying to establish - or disputing with the scheme in question? Drip feeding bits of information from the scheme rules is a recipe for getting a misleading, or plain wrong, answer, which is why knowing the purpose of all your questions might enable people here to try and be more helpful.

xylophone

mid-naughties).

Ooh la la....?

QrizB

Lawrence631 said:

I was in an occupational pension scheme from 1985 to 2000 - 15 years’ service at 1/60 accrual rate.

If this was a final salary pension, you've accrued 15/60ths (ie. 1/4) of your final salary as a pension, index-linked by whichever method the scheme uses.

If your salary in 2000 was £20k pa, that's £5k pa before indexing.

Qyburn

hyubh said:
there is no 'Inland Revenue' either (it got merged with another body to form HMRC in the mid-noughties).

I presume Inland Revenue was his employer at that time. But that's just a guess. I'm not sure how anyone can comment on the internal rules and details of a pension scheme without knowing what scheme is being discussed.

Marcon

Qyburn said:

hyubh said:
there is no 'Inland Revenue' either (it got merged with another body to form HMRC in the mid-noughties).

I presume Inland Revenue was his employer at that time. But that's just a guess. I'm not sure how anyone can comment on the internal rules and details of a pension scheme without knowing what scheme is being discussed.

...or having sight of the full rules of that scheme...

Dazed_and_C0nfused

Lawrence631 said:

Hi, thanks for all the comments. The main issue I am trying to addriess is that I have recently wangled a copy the trust deed and rules for my ex-employed (not the Inland Revenue) and discovered that the Rules permitted total of AVC and final salary contributions to be 15% of remuneration, however when I started AVC contributions the employer calculated my AVC contributions based on my much lower salary. My remuneration was 1.25 x salary (25% bonus scheme). I calculate I have potentially lost out on well over £10k in AVC pension due to this discrepancy alone, there are other less significant discrepancies. Due to this I do not trust the employer and before approaching them i want to be as well informed as possible. 

I thought the usual thing was the employee determine (within applicable limits) how much an AVC contribution would be?

Do you mean you have missed out on having an AVC pension pot of £10k or an annual pension of £10k?

If the latter how have you calculated that given the end outcome of an AVC is largely dependent on fund performance?

Marcon

Lawrence631 said:

Hi, thanks for all the comments. The main issue I am trying to address is that I have recently wangled a copy the trust deed and rules for my ex-employed (not the Inland Revenue) and discovered that the Rules permitted total of AVC and final salary contributions to be 15% of remuneration, however when I started AVC contributions the employer calculated my AVC contributions based on my much lower salary. My remuneration was 1.25 x salary (25% bonus scheme). I calculate I have potentially lost out on well over £10k in AVC pension due to this discrepancy alone, there are other less significant discrepancies. Due to this I do not trust the employer and before approaching them i want to be as well informed as possible. 

There is no 'wangling' needed. The trust deed & rules constitute a disclosure document and any member is entitled to a copy. You could have made this check at any time during or since your active membership, so you are way out of time for the Pensions Ombudsman to investigate.

I don't know what sort of outcome you are expecting, but given you've got the pension based on the AVC contributions you actually paid, and had the benefit of a higher salary (because your AVC contributions were not based on total remuneration), it's hard to see where any complaint would go. You might have lost the opportunity to pay higher AVCs, but as you didn't actually do so, you haven't suffered any actual financial loss.

Dazed_and_C0nfused said:

I thought the usual thing was the employee determine (within applicable limits) how much an AVC contribution would be?

True, but it was not uncommon for members to be able to opt for 'maximum payable' rather than actually specifying an amount (in the 'old days' it was capped at 15% of remuneration).

xylophone

there is no 'Inland Revenue' either (it got merged with another body to form HMRC in the mid-noughties).

https://en.wikipedia.org/wiki/HM_Revenue_and_Customs#:~:text=HMRC was formed by the,Crown enclosed within a circle.&text=Customs, excise and gambling.

HM Revenue and Customs (His Majesty's Revenue and Customs, or HMRC)[4][5] is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support, the administration of other regulatory regimes including the national minimum wage and the issuance of national insurance numbers. HMRC was formed by the merger of the Inland Revenue and HM Customs and Excise, which took effect on 18 April 2005.[6] The department's logo is the St Edward's Crown enclosed within a circle.

I notice that this Pensions Ombudsman ruling of 2006 still refers to Inland Revenue

Applicant	:	Mr A F Merritt
Scheme	:	AFM Holdings Ltd Pension Scheme (the Scheme)
Respondents	:	Confederation Life Insurance Company (UK) Ltd (Confederation Life) Sun Life Financial of Canada (Sun Life)

		Mr Merritt complains that Sun Life gave him incorrect advice when he retired early. He says that he was advised that he was receiving the maximum benefits allowed by the Inland Revenue but later found this to be incorrect. Mr Merritt says that the errors made have resulted in financial injustice. He further complains that he has been caused distress and inconvenience INLAND REVENUE MAXIMUM BENEFITS The Inland Revenue has discretion to approve occupational pension schemes under Section 591 of the Income and Corporation Taxes Act 1988. Their Practice              Note (IR12), indicated what requirements should be met in order to gain or retain discretionary approval. IR12 states : “Total benefits are measured in terms of an annual pension for the member... The maximum aggregate benefit payable without taking account of retained benefits is a pension... of 1/60th of final remuneration for each year of service (up to 40 years)... Benefits greater than 1/60th of final remuneration for each year of service may be given up to a maximum of 1/30th of final remuneration for each year of service (up to 20 years) provided that the aggregate of the benefits in respect of service with the current employer together with any retained benefits does not exceed 2/3rds of final remuneration...” and “…For members with pre 17 March 1987 continued rights [a Class C member], benefits greater than 1/60th of final remuneration for each year of service may be given on retirement at normal retirement date in accordance with the table set out below [giving a maximum of 40/60ths for a member with 10 or more years' service] provided that the aggregate of the benefits... in respect of service with the current employer together with any retained benefits does not exceed 2/3rds of final remuneration. Benefits on this scale, however, may be given without reference to retained benefits for a member other than a controlling director... whose earnings for the first year's employment following entry to the scheme do not exceed ¼ of the permitted maximum..” and “The maximum total benefits for a member with continued rights who retires before normal retirement date are the greater of 1/60th of final remuneration for each year of service up to 40 years and a proportion of the maximum total benefits had the member completed his or her service to normal retirement date