Trustee decision to pay back contributions only and none of pension pot - is this correct?

Maryanne63

My understanding of pensions is very limited, so any feedback on this would be gratefully accepted.

My brother had a pension pot with Barclays Bank, who he worked for in the 1980s, leaving after a few years. He contributed to a pension, as did his employer. My brother died at the end of 2022, aged 63, and not having drawn down his pension.

The Barclays Bank UK Retirement Fund (UKRF) - The Pension Investment Plan

I have a copy letter from 2021 - Statement of Your Accumulated Fund - showing his unit holdings and values, totalling £144,345.54 (see image).

However, the Trustees of the pension plan decided to pay out only the contributions that my brother had physically paid himself - totalling just over £11,000 - which they paid to his nephews who were named in his will. My brother never married and never had children. He had been unwell for the last few years of his life and not in a good mental state.

Does the Trustee decision sound correct? My brother I think had just assumed that his pension would pay out and his nephews would benefit. 

penners324

Sounds very wrong. However, you will need to look at the scheme rules.

xylophone

I am somewhat puzzled by this.

https://www.sec.gov/Archives/edgar/data/312070/000119312519046606/R52.htm

I am wondering whether the statement to which you refer represents the cost to the UKRF of providing a Defined Benefit Pension to your brother (rather than the statement of a Defined Contribution Pot)?

Your late brother was employed by Barclays in the eighties so it would seem that he would have been a member of the 1964 scheme which was Defined Benefit and non contributory.

 If this was the case, he would have left with a  deferred DB pension.

In general, DB benefits are for members, widows/ers and certain dependants.

If your brother was a deferred member of the DB scheme, he could have claimed his benefits at 60. It may be that the delicate state of his health caused him not to concern himself overmuch with financial matters?.

Your late brother was unmarried and childless when he died.  This being the case and if he  was a deferred member of the  DB scheme who had not claimed his pension, I wonder whether the  money paid to your nephews was some kind of ex gratia payment or pension he would have received had he claimed it?

 However, the above is only a guess. Were you your brother's executor?  The way to get the definitive answer is to contact the Administrator - Willis Towers Watson?

Marcon

Maryanne63 said:

My understanding of pensions is very limited, so any feedback on this would be gratefully accepted.

My brother had a pension pot with Barclays Bank, who he worked for in the 1980s, leaving after a few years. He contributed to a pension, as did his employer. My brother died at the end of 2022, aged 63, and not having drawn down his pension.

The Barclays Bank UK Retirement Fund (UKRF) - The Pension Investment Plan

I have a copy letter from 2021 - Statement of Your Accumulated Fund - showing his unit holdings and values, totalling £144,345.54 (see image).

However, the Trustees of the pension plan decided to pay out only the contributions that my brother had physically paid himself - totalling just over £11,000 - which they paid to his nephews who were named in his will. My brother never married and never had children. He had been unwell for the last few years of his life and not in a good mental state.

Does the Trustee decision sound correct? My brother I think had just assumed that his pension would pay out and his nephews would benefit. 

The pensions world was a very different place in the 1980s - especially if this was pre-1988. This is a trust-based defined contribution occupational scheme and the trustees are normally bound by the rules of the scheme as they existed at the time a member left the employer's service (subject to any subsequent changes in general legislation which over-rode the scheme's own rules).

I would certainly ask the administrators to confirm, but I think you'll get an answer along the lines of: 'If someone dies before drawing their benefits, the trustees will use the value of their fund to buy a pension for their spouse or eligible child(red). If there is no spouse and/or eligible child, a refund of the member's own contributions will be paid. The trustees will use their discretion to decide to whom the refund will be paid'.

The balance of the 'pot' would be retained within the scheme, typically being used to defray the expenses of administration and other running costs.

I doubt if the rules give the trustees the option to pay out the full value of the Fund in the absence of a spouse/child who could qualify for a survivor's pension, but my memory of legislation in the 1980s is distinctly hazy! Definitely double check, but be prepared for an answer along the lines of the one I've suggested above.

xylophone

The pensions world was a very different place in the 1980s - especially if this was pre-1988. This is a trust-based defined contribution occupational scheme 

I have done a bit of digging and found  this from the Trustees of the UKRF.

https://epa.towerswatson.com/accounts/barclays/public/barclays-bank-sections-of-the-ukrf/

The penultimate line references the  Pension Investment Plan as a section of the scheme and states that it is indeed Defined Contribution.

 Unfortunately there is no link to the Section Rules but it seems very likely  that Marcon has come up with the correct explanation.

I was wondering why your late brother was not a member of the DB 1964 Scheme - perhaps Barclays did not permit employees to join  the DB scheme until  they reached a certain age, (maybe 25), offering the PIP as an alternative? 

sandsy

I'm in a DC trust based occupational pension scheme where we found out a couple of years ago that the rules only allow for refund of contributions on death rather than the full pot value. The scheme was brought in when the previous DB scheme closed to new members. To say it came as shock to the membership would be an understatement though I think there are plans to change the rules now.