Employer Underpaid Contributions

Lelbel76

It has recently come to light that my employer has been underpaying their pension contribution for almost 2 years. 
My pension scheme states that after 10 years service, the employer's contribution increases from 5% to 7.5%. I reached 10 years service in Sept '22. 
I have emailed the HR department, who acknowledged the error and have since contributed a lump sum equivalent to the underpaid amount.
My question is, should there be some kind of compensation for the missed investment time? I'm thinking some kind of compound interest?
Is it something I need to calculate and present to them to request the difference or should the onus be on them to sort this? 
TIA

Hoenir

Have you asked the question of HR in broad terms? 

MallyGirl

if you are up for some spreadsheeting, you could calculate what the missing growth would be worth by looking at your statement and modelling the extra going in using the same dates as you actual contribution and looking up the prices for the fund(s) online

leosayer

In a word, yes.

They should put you back in the same position as if their error had not occurred.

Practically, they need to buy you any missing units in your fund holding(s). 

Lelbel76

Hoenir said:

Have you asked the question of HR in broad terms? 

I asked how they had calculated the lump sum and they just sent me a list of unpaid contributions. I've not yet raised the missing 'interest'.

Lelbel76

MallyGirl said:

if you are up for some spreadsheeting, you could calculate what the missing growth would be worth by looking at your statement and modelling the extra going in using the same dates as you actual contribution and

I did take each monthly missing contribution amount and used a compound interest rate over the number of months it had been 'missing' but wasn't sure if that was the right way to go about it.

Marcon

Lelbel76 said:

It has recently come to light that my employer has been underpaying their pension contribution for almost 2 years. 
My pension scheme states that after 10 years service, the employer's contribution increases from 5% to 7.5%. I reached 10 years service in Sept '22. 
I have emailed the HR department, who acknowledged the error and have since contributed a lump sum equivalent to the underpaid amount.
My question is, should there be some kind of compensation for the missed investment time? I'm thinking some kind of compound interest?
Is it something I need to calculate and present to them to request the difference or should the onus be on them to sort this? 
TIA

The easier you make it for them to do the right thing the easier it will be to get them to do it!

I'd email HR again and ask them how [not if] they are going to arrange for the necessary adjustment to be made to ensure you are put in the position you would have been in had the error not occurred; and suggest that they should approach the pension provider to do the necessary calculation, given that it is going to be quite complicated.

MallyGirl

Lelbel76 said:

MallyGirl said:

if you are up for some spreadsheeting, you could calculate what the missing growth would be worth by looking at your statement and modelling the extra going in using the same dates as you actual contribution and

I did take each monthly missing contribution amount and used a compound interest rate over the number of months it had been 'missing' but wasn't sure if that was the right way to go about it.

if you want to get some redress from them it will be easier if you provide solid figures. Your pension is likely invested so the concept of interest doesn't exist.
As stated above - you need to look at how many investment units the missing extra contribution would have bought each time and add them up. Compare that with how many units the lump sum bought and ask for the value of what is needed to make up the difference

Andy_L

MallyGirl said:

if you are up for some spreadsheeting, you could calculate what the missing growth would be worth by looking at your statement and modelling the extra going in using the same dates as you actual contribution and looking up the prices for the fund(s) online

Although they'd want to keep quite if that showed a loss over the 2 years

MallyGirl

absolutely! That is why the calculations have to be accurate.

Lelbel76

Thanks everyone!