No tax relief on my current pension?

JoeCrystal

Clcatt91 said:

I have already told a few people at work, when I was trying to work out if it was just me or if I had made a mistake, but to be honest most of them aren't that fussed because it's the pension, not money owed to them now. It actually quite surprised me to be honest, apparently I'm the only person who's outraged about lost money. 

I had the same issue when, for a few years, payroll was incorrectly deducted contributions before taxes, and then the pension provider added on tax relief, so all employees' contributions were an extra 25% higher. It took me a long time to convince the Payroll that they were doing their job wrong. As it turns out, they didn't understand how net pay and relief at score work. Ultimately, it was resolved with millions of pounds paid back to the HMRC as the pension provider recalculated all contributions since the auto-enrollment started as if they were paid without needing tax relief from HMRC. Only very few employees were even aware of the issues, as the employer does not need to communicate this to the employees.

They quickly changed how they calculate the auto-enrollment (based on the amounts above the lower level of qualifying earnings) rather than the entire salary and collecting pension contributions after taxes. So yes, as long as you ask questions and just saying you are concerned that the employer may be doing something unlawful politely, they will eventually have to sort it out

FIREDreamer

JoeCrystal said:

Clcatt91 said:

I have already told a few people at work, when I was trying to work out if it was just me or if I had made a mistake, but to be honest most of them aren't that fussed because it's the pension, not money owed to them now. It actually quite surprised me to be honest, apparently I'm the only person who's outraged about lost money. 

I had the same issue when, for a few years, payroll was incorrectly deducted contributions before taxes, and then the pension provider added on tax relief, so all employees' contributions were an extra 25% higher. It took me a long time to convince the Payroll that they were doing their job wrong. As it turns out, they didn't understand how net pay and relief at score work. Ultimately, it was resolved with millions of pounds paid back to the HMRC as the pension provider recalculated all contributions since the auto-enrollment started as if they were paid without needing tax relief from HMRC. Only very few employees were even aware of the issues, as the employer does not need to communicate this to the employees.

They quickly changed how they calculate the auto-enrollment (based on the amounts above the lower level of qualifying earnings) rather than the entire salary and collecting pension contributions after taxes. So yes, as long as you ask questions and just saying you are concerned that the employer may be doing something unlawful politely, they will eventually have to sort it out

What if someone had transferred out in the interim? Messy!

Or bought an annuity - very messy!

Albermarle

Clcatt91 said:

Marcon said:

Clcatt91 said:

This is interesting. So the company could get in trouble? 

You'll earn yourself far more kudos in the eyes of your employers if you behave coolly, sensibly and patiently while they sort out what is going to be a major headache, as opposed to stirring up your fellow employees (should such a move even be in your thoughts...). 

I have already told a few people at work, when I was trying to work out if it was just me or if I had made a mistake, but to be honest most of them aren't that fussed because it's the pension, not money owed to them now. It actually quite surprised me to be honest, apparently I'm the only person who's outraged about lost money. 

I shall take the advice on board, it's not like they can ignore the issue now I've mentioned it. And If any of the people who I've told ask whats happening, il just say they're working on it. 

Most people are nor interested/do not understand pensions, and the default position is to bury their head in the sand.

penners324

What does your Pension account say? That's where the tax will be added

Albermarle

penners324 said:

What does your Pension account say? That's where the tax will be added

The provider works with Net Pay schemes, so no tax is ever added by the provider.

Marcon

Albermarle said:

penners324 said:

What does your Pension account say? That's where the tax will be added

The provider works with Net Pay schemes, so no tax is ever added by the provider.

...and if anyone ever wanted a shining example of the utter stupidity of the government's suggestion that employees could nominate their own preferred pension provider, this thread provides it! Can you imagine what would happen if some people chose net pay schemes and others RAS?

Clcatt91

Hello All!

I have an update. The company accountant who I have been emailing came to my site today so I was able to ask her directly if there was any news. She told me she had spoken with the payroll company, and I was right, our pension is a net pay scheme and they had been dealing with it as if it was a relief at source scheme. It looks like only our site is affected, not the whole company. Still a good 60 odd employees to sort though. 
Now heres the problem. The way she explained it to me was that the net pay scheme and relief at source schemes are what she classes as ' a benefit'. So currently the company is not doing anything wrong legally. They said they are working on getting everyone onto the other scheme, and by that i think they mean getting the payroll company to treat it as a net pay scheme, so that everyone can have the added benefit going forwards. She is meeting with the payroll company in mid June so that they can work on potentially people claiming back the money that we lost through the government, but she doesn't know how far back they will be able to claim. Either way she said its going to take a long time. 

I guess what makes me sad is the fact that through the company's mistake, we are possibly going to miss out on hundreds of pounds to our pension pots. I was sure it would be possible to claim the money back, but i did have a small hope that maybe the company would take into consideration the money we've lost from reduced interest. I worked out if my pension had been paid correctly my pension would have grown an extra £600. Now im not even sure I'll get the missing £965 tax relief.  

xylophone

Now heres the problem. The way she explained it to me was that the net pay scheme and relief at source schemes are what she classes as ' a benefit'. So currently the company is not doing anything wrong legally. 

How's that again?

The employer's contribution is the "benefit" ?

Have you received an acknowledgement and explanation in WRITING?

If not, insist on one and if still dissatisfied, make a formal complaint?

https://www.gov.uk/personal-pensions-your-rights/complaints

Albermarle

The way she explained it to me was that the net pay scheme and relief at source schemes are what she classes as ' a benefit'. 

However she describes it, if it is your employment contract then they have to stick to it.

Marcon

Clcatt91 said:

Hello All!

I have an update. The company accountant who I have been emailing came to my site today so I was able to ask her directly if there was any news. She told me she had spoken with the payroll company, and I was right, our pension is a net pay scheme and they had been dealing with it as if it was a relief at source scheme. It looks like only our site is affected, not the whole company. Still a good 60 odd employees to sort though. 
Now heres the problem. The way she explained it to me was that the net pay scheme and relief at source schemes are what she classes as ' a benefit'. So currently the company is not doing anything wrong legally. They said they are working on getting everyone onto the other scheme, and by that i think they mean getting the payroll company to treat it as a net pay scheme, so that everyone can have the added benefit going forwards. She is meeting with the payroll company in mid June so that they can work on potentially people claiming back the money that we lost through the government, but she doesn't know how far back they will be able to claim. Either way she said its going to take a long time. 

She can class it as anything she likes, but you're still entitled to have the matter resolved in a way which puts you in the position you should have been in had the pension been treated correctly (net pay rather than RAS), with the correct amounts of tax/contributions being paid.

Clcatt91 said:

I guess what makes me sad is the fact that through the company's mistake, we are possibly going to miss out on hundreds of pounds to our pension pots. I was sure it would be possible to claim the money back, but i did have a small hope that maybe the company would take into consideration the money we've lost from reduced interest. I worked out if my pension had been paid correctly my pension would have grown an extra £600. Now im not even sure I'll get the missing £965 tax relief.  

I'd be proactive rather than sad. Send your employer an email, with a cc to the accountant (if you have her details), very politely assuring them that you understand this will take considerable time to sort out, given that both the tax position and the level of contributions will need to be remedied to ensure that employees are put in the position they would have been in had matters been handled correctly from the outset.

You really don't need to settle for less than your lawful entitlement.