DB Pension PCLS Late may incur losses

Pat38493

My PCLS for my DB pension (and the missing monthly payments) is nearly 2 months late into payment and counting.  The provider claims that they are waiting for buy in funds to be provided by the insurer, but this has been the same update for many weeks.

In about 2 months from now, if it still isn't paid, I will start to incur financial losses depending how I manage the situation.  These could include:
- I might need to take out a loan or run up credit card bills.
- I may be forced to sell investments at a loss depending on market conditions, and take money out of ISA accounts where I will lose the tax wrapper status.
- I might be forced to request my employer whether I can go back to working full time (which they may or may not agree to) as I went part time at the start of this year.

This is in the end a short term situation because we are also in the process of downsizing (sale agreed on both sides), so in about 3 months from now it will not be an issue either way.

I am wondering what is the best way to manage this if I want to make a complaint to the DB provider and ask for recompense for my losses?  For example, the cheapest way for me to fund the short term gap is to take out a personal loan, and then pay back the personal loan as soon as I have the money available.  However, this way it will be hard to demonstrate my exact losses (the interest that was charged during the time the loan was in payment).  Alternatively I can use credit card borrowing which will be much more expensive but it will be easier to demonstrate the exact amount of losses/interest incurred?

Dazed_and_C0nfused

Annoying though it may be that this happened I wouldn't bank on getting anything other than some flowers or a nominal payment (£25-£50) as part of an apology for the poor service.

Especially if they can demonstrate that a third party was ultimately the cause.

Pat38493

Dazed_and_C0nfused said:

Annoying though it may be that this happened I wouldn't bank on getting anything other than some flowers or a nominal payment (£25-£50) as part of an apology for the poor service.

Especially if they can demonstrate that a third party was ultimately the cause.

Maybe, but I'll still make a complaint anyway.  Also - I would challenge that the 3rd party is the cause since as far as I can tell, even though I notified them 3 months in advance that I wanted to do this (as per their request), they didn't actually do anything until 2 weeks before the in payment requested date, even though they presumably knew that they would have to wait for the insurer and they presumably knew that this would take more than 2 weeks.

Tommyjw

Blaming a buy-in provider is odd , although i'm sure there are plenty of different experiences to me.

I'd expect the schemes own bank account to be no different to normal where in a buy-in, they hold their own funds and keep track of it enough to cover expenses, and then typically you then just tell them "Hey we paid this guy £50k, pay us back please".  If it is the case they have to fund the account before payments out, typically one of the benefits of a Scheme going to an insurer is how standard, simple, "bulk" everything is. They are massive companies, the same processes are used, no faffing about with one person being off disrupting something etc. So again, delays of payments would seem odd, they should be doing this all day every day much more automated than smaller pension admin companies

I'd therefore likely lean on agreeing, whatever the exact reason, it's the admin companies fault. They probably didnt trigger something when they should have and are passing the buck.

I'd disagree the buy-in provider counts as a third-party in the same sense, your complaint is ultimately against the Trustees of your Scheme and they have responsibiltiy for the buy-in provider, too. Just like they do for the pension administrator.

DRS1

There has been mention of issues with payments from schemes which have bought in their liabilities on here before (unless that was the OP on another thread).  It may be possible that this is a new set up and the scheme and the insurer need to work out the kinks but there is no excuse for paying late.  They owe interest on the payments (both lump sum and pension) which are late.  I think the Court rate of interest on debts is 8% pa.  So I think you should get in touch with the administrators saying that is the interest rate you expect on the late payments.  Lodge a formal complaint now and talk to the Pensions Ombudsman office to see what they say about buy ins being used as an excuse for late payment.  Maybe they have heard of other cases and can give you some help on speeding things along.

And then I think you should email or call the scheme administrators every day until they pay up.  Make a nuisance of yourself.

Marcon

Pat38493 said:

My PCLS for my DB pension (and the missing monthly payments) is nearly 2 months late into payment and counting.  The provider claims that they are waiting for buy in funds to be provided by the insurer, but this has been the same update for many weeks.

In about 2 months from now, if it still isn't paid, I will start to incur financial losses depending how I manage the situation.  These could include:
- I might need to take out a loan or run up credit card bills.
- I may be forced to sell investments at a loss depending on market conditions, and take money out of ISA accounts where I will lose the tax wrapper status.
- I might be forced to request my employer whether I can go back to working full time (which they may or may not agree to) as I went part time at the start of this year.

This is in the end a short term situation because we are also in the process of downsizing (sale agreed on both sides), so in about 3 months from now it will not be an issue either way.

I am wondering what is the best way to manage this if I want to make a complaint to the DB provider and ask for recompense for my losses?  For example, the cheapest way for me to fund the short term gap is to take out a personal loan, and then pay back the personal loan as soon as I have the money available.  However, this way it will be hard to demonstrate my exact losses (the interest that was charged during the time the loan was in payment).  Alternatively I can use credit card borrowing which will be much more expensive but it will be easier to demonstrate the exact amount of losses/interest incurred?

'The provider' is still the trustee of your DB scheme at the buy in stage. If you're going to make a formal complaint, then use the scheme's Internal Dispute Resolution Procedure (copy available from the administrators if there isn't a website where you can download it - an IDRP is scheme-specific).

If you've not got a flexible ISA, now might be the moment (although remember that funds withdrawn from it have to returned to it within the same tax year to ensure they keep their ISA status).

DRS1 said:

There has been mention of issues with payments from schemes which have bought in their liabilities on here before (unless that was the OP on another thread).  It may be possible that this is a new set up and the scheme and the insurer need to work out the kinks but there is no excuse for paying late.  They owe interest on the payments (both lump sum and pension) which are late.  I think the Court rate of interest on debts is 8% pa.  So I think you should get in touch with the administrators saying that is the interest rate you expect on the late payments.  Lodge a formal complaint now and talk to the Pensions Ombudsman office to see what they say about buy ins being used as an excuse for late payment.  Maybe they have heard of other cases and can give you some help on speeding things along.

And then I think you should email or call the scheme administrators every day until they pay up.  Make a nuisance of yourself.

PO isn't going to say anything specific, and will simply (correctly) point out that if the case is submitted to them (after it has completed the whole IDRP), they will consider all relevant facts.

Better idea: let them get on with sorting out the issue rather than downing tools every day just to say the same thing.

wjr4

Why would you reduce your hours without sorting your pension income first?

DRS1

PO isn't going to say anything specific, and will simply (correctly) point out that if the case is submitted to them (after it has completed the whole IDRP), they will consider all relevant facts.

Sometimes there are things which come up often enough for the PO to issue a helpful note on the subject (eg overpayments).  This may be too new for that but if it is becoming a "thing" then the Ombudsman might have something useful to say - even if it is that they think it is fine for schemes to use delays by insurers as an excuse for late payment of benefits.  And if they say that then the OP knows he is on a hiding to nothing  and can do what you say next:

Better idea: let them get on with sorting out the issue rather than downing tools every day just to say the same thing.

I am simply applying the squeaky wheel principle.  And if I were the OP facing the prospect of having to borrow money or max out my credit cards in a few months then I would be jumping up and down to make sure they are actually doing something to sort out the situation.

Of course this could be a frustrating thing for the OP as well as the administrators.  I remember last summer chasing an insurer for a payment as part of an annuity purchase where the deadline for the annuity quote was fast approaching.  Oh yes it will be made on Monday - nothing.  Oh yes it is with so and so call back next Monday.  Oh yes it will be paid by the weekend.  Call on Monday if it hasn't arrived..  Oh did we say last weekend?  No we meant next weekend.  And of course you never speak to the same person so it is like starting from square one every time.  The good news is it was made with 3 days to spare (two of those being a weekend and the third a bank holiday!)  Maybe the moral of that tale is to tell them there is a deadline and they might make it (though really in this case the deadline was two months ago.)

ian16527

wjr4 said:

Why would you reduce your hours without sorting your pension income first?

I think the OP tried to be proactive to no avail 

"I notified them 3 months in advance that I wanted to do this (as per their request), they didn't actually do anything until 2 weeks before the in payment requested date"

Pat38493

wjr4 said:

Why would you reduce your hours without sorting your pension income first?

As noted above, I have other options, and I made surer that I could cover at least 4-5 months from cash without needing the PCLS.  I am not going to go bankrupt or anything - I can also if needed draw on the remaining TFC in my pension, but it's galling to be forced into that due to inefficient practices by a pension provider.

i.e. - why should I have to change my retirement decumulation financial plan just because the pension administrator can't do their job on time.  The cost to me might only be a few hundred pounds or whatever but that is my money.

Also - I am going to stop work completely at some point this year, but I am not sure when yet and I am not wanting to trigger MPAA and take taxable income from my pension, and then later end up working for longer and paying 40% tax in 25/26.  If I already knew the exact date of my complete stop of work, I could make a DC withdrawal to bridge the gap as well.  I can also simply work one more month to more than cover any losses due to interest charges, but again, why should I have to do that?

My long term plan noted that during 2025 and 2026, I will be spending a lot more than in subsequent years before some large costs roll off.

As DRS1 noted, it's frustrating that DB administrators seem to operate with no actual legal deadlines that they have to stick to - as far as I can tell, theoretically they could take 3 years or 20 years before they start paying my pension and there's very little I could do about it other than go through a very lengthy multi layer complaints procedure.  As I have noted on some other threads in the past, if they were a bank or a building society or an insurance company, they wouldn't last long if they operated like that.

FIREDreamer

wjr4 said:

Why would you reduce your hours without sorting your pension income first?

A certain group of women did. 😂😂😂