Company cut payments into my company pension, help.

Inspector_Gizmo

Hi I contribute to a company pension through a salary sacrifice.  I have recently discovered that about two years ago, the company started paying a much lower amount into my pension. Yes, I know I should have spotted this at the time but I didn't.  Nor did anyone else in the company, and I have discovered that this affects almost everyone in the scheme.  It appears that our payroll provider changed the person responsible for our payroll at the same time that significant changes were made to our accounts function who actually pay the amount into our pensions.  There are faults therefore on several sides, but the company has shown willing to solve the problem.  They have also asked me not to make it known to my colleagues that this issue exists till they have a solution to it.  I know that the company used to pay the saved NI into my pension, which many companies don't, and I know that I also used to pay an additional sum as a type of AVC into the pension.  Now the company is asking me to provide evidence of the arrangements regarding the sums paid into my pension.  Are they not responsible for keeping this information?  I do have some documentation to show the company's intention but that dates back nearly 20 years.  I am worried that if I present this I might not get as much as I was getting paid into my pension.
Clearly I want to carry on working for this company and both sides want to resolve this, but should I be getting legal advice or should I be getting advice from a pensions expert?  How should I calculate the lost interest on each payment that was underpaid into my pension?

Marcon

Inspector_Gizmo said:

Hi I contribute to a company pension through a salary sacrifice.  I have recently discovered that about two years ago, the company started paying a much lower amount into my pension. Yes, I know I should have spotted this at the time but I didn't.  Nor did anyone else in the company, and I have discovered that this affects almost everyone in the scheme.  

Indeed you should - but yet again an example of just how few people pay attention to either their pension or their payslip!

Inspector_Gizmo said:

It appears that our payroll provider changed the person responsible for our payroll at the same time that significant changes were made to our accounts function who actually pay the amount into our pensions.  There are faults therefore on several sides, but the company has shown willing to solve the problem.  They have also asked me not to make it known to my colleagues that this issue exists till they have a solution to it.  I know that the company used to pay the saved NI into my pension, which many companies don't, and I know that I also used to pay an additional sum as a type of AVC into the pension.  Now the company is asking me to provide evidence of the arrangements regarding the sums paid into my pension.  Are they not responsible for keeping this information?  I do have some documentation to show the company's intention but that dates back nearly 20 years.  I am worried that if I present this I might not get as much as I was getting paid into my pension.

If you don't provide it then ultimately someone else will.

Inspector_Gizmo said:

Clearly I want to carry on working for this company and both sides want to resolve this, but should I be getting legal advice or should I be getting advice from a pensions expert?  

Legal advice on what? If the company is going to honour whatever it agreed with employees (and it certainly sounds that way), it's hard to see what you'd be instructing a lawyer to do.

Inspector_Gizmo said:

 How should I calculate the lost interest on each payment that was underpaid into my pension?

You don't have to. That will be for your employer to sort out with the pension provider - and it isn't about interest, it's about investment returns (assuming this is a defined contribution scheme, and it sounds as if it is?).

Exodi

It's pretty incredulous that this 'affects almost everyone in the scheme' and yet no-one has noticed in two years until now. But then many lose interest when it comes to pensions I guess.

Presumably if they haven't applied the sacrifice, then you were paid the amount in the your payslip so you are theoretically not worse off (though practically I appreciate you will be miffed you have paid tax, likewise employer miffed they have paid higher employer NI).

If you've had your pay reduced, but the pensions payments haven't been made, at least it makes the issue simpler.

Inspector_Gizmo said:

Clearly I want to carry on working for this company and both sides want to resolve this, but should I be getting legal advice or should I be getting advice from a pensions expert?  How should I calculate the lost interest on each payment that was underpaid into my pension?

Out of interest, what outcome are you seeking? They've mentioned they're agreeable to resolving it.

You mention 'lost interest', yet I presume your funds are invested, so it would be more appropriate to calculate lost investment growth HOWEVER if you were paid the amount that should have been sacrificed I don't know if this is reasonable either as they could just as easily argue that while you were technically 'underpaid' into your pension, you were 'overpaid' into your salary. If you weren't I guess it would be relatively easy to evidence what the growth of your portfolio has been over the past two years.

leosayer

What does your employer's policy say about their % contribution level and your % contribution level?

How do the amounts they have contributed different from the above? This is the key thing.

My previous employer changed (well, reduced of course) the % they contribute more than once during my tenure - but we were all informed of the changes.

Marcon

Exodi said:

It's pretty incredulous that this 'affects almost everyone in the scheme' and yet seemingly no-one has noticed in two years until now. But then many take pensions seriously I guess.

Presumably if they haven't applied the sacrifice, then you were paid the amount in the your payslip so you are theoretically not worse off (though practically I appreciate you will be miffed you have paid tax, likewise employer miffed they have paid higher employer NI).

I think there's a 'not' missing in your second sentence!

If this was salary sacrifice, OP's salary will have been permanently and contractually reduced, so they won't have been paid a higher salary unless their contract was changed - ie they will have missed out on the employer contribution to the pension scheme, but not had a higher salary (assuming the company understands how salary sacrifice actually works, even if the implementation went wrong in terms of pension contributions).

Exodi

Marcon said:

Exodi said:

It's pretty incredulous that this 'affects almost everyone in the scheme' and yet seemingly no-one has noticed in two years until now. But then many take pensions seriously I guess.

Presumably if they haven't applied the sacrifice, then you were paid the amount in the your payslip so you are theoretically not worse off (though practically I appreciate you will be miffed you have paid tax, likewise employer miffed they have paid higher employer NI).

I think there's a 'not' missing in your second sentence!

If this was salary sacrifice, OP's salary will have been permanently and contractually reduced, so they won't have been paid a higher salary unless their contract was changed - ie they will have missed out on the employer contribution to the pension scheme, but not had a higher salary (assuming the company understands how salary sacrifice actually works, even if the implementation went wrong in terms of pension contributions).

Thanks, updated the first sentence - if only every one took pensions seriously!

If their salary was reduced the correct amount then it certainly makes the issue simpler to resolve at least (though bad for the company realising they've underpaid their staff for 2 years!). As an aside, at least in my experience with salary sacrifice, I'm the one informing the pension provider how much to 'take' via DD instruction (though this needs to be signed off, of course).

How would the employer go about reducing the salary sacrifice DD's without their employees knowledge or consent? Is a 'workplace salary sacrifice scheme' such a thing? Or maybe there are providers that allow you to make payments ad hoc via bank transfer?

Marcon

Exodi said:

Marcon said:

Exodi said:

It's pretty incredulous that this 'affects almost everyone in the scheme' and yet seemingly no-one has noticed in two years until now. But then many take pensions seriously I guess.

Presumably if they haven't applied the sacrifice, then you were paid the amount in the your payslip so you are theoretically not worse off (though practically I appreciate you will be miffed you have paid tax, likewise employer miffed they have paid higher employer NI).

I think there's a 'not' missing in your second sentence!

If this was salary sacrifice, OP's salary will have been permanently and contractually reduced, so they won't have been paid a higher salary unless their contract was changed - ie they will have missed out on the employer contribution to the pension scheme, but not had a higher salary (assuming the company understands how salary sacrifice actually works, even if the implementation went wrong in terms of pension contributions).

Thanks, updated the first sentence - if only every one took pensions seriously!

If their salary was reduced the correct amount then it certainly makes the issue simpler to resolve at least (though bad for the company realising they've underpaid their staff for 2 years!). As an aside, at least in my experience with salary sacrifice, I'm the one informing the pension provider how much to 'take' via DD instruction (though this needs to be signed off, of course).

How would the employer go about reducing the salary sacrifice DD's without their employees knowledge or consent? Is a 'workplace salary sacrifice scheme' such a thing?

In a 'normal'(!) salary sacrifice arrangement, the overall monthly payment amount (whether by DD, BACS transfer or however the employer makes payment to the provider) is between the employer and the pension provider. Employees wouldn't know or have to agree the amount, because it's already been contractually established what their salary will be and how much they are sacrificing. If the employer messes up - as they have done here - it comes to light when either the employee or the employer wakes up and spots there's been an error.

I'm not too sure how your rather informal arrangement would be viewed by HMRC if it ever came to light, but maybe you are one of the 'exceptions'. See https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye and note particularly:

As a general rule, if an employee swaps between cash earnings and a non-cash benefit whenever they like, any expected tax and National Insurance contributions advantages under a salary sacrifice arrangement will not apply. There are some exceptions to this, Employment Income Manual 42755 gives more information.

Inspector_Gizmo

Marcon said:

Inspector_Gizmo said:

Hi I contribute to a company pension through a salary sacrifice.  I have recently discovered that about two years ago, the company started paying a much lower amount into my pension. Yes, I know I should have spotted this at the time but I didn't.  Nor did anyone else in the company, and I have discovered that this affects almost everyone in the scheme.  

Indeed you should - but yet again an example of just how few people pay attention to either their pension or their payslip!

Inspector_Gizmo said:

It appears that our payroll provider changed the person responsible for our payroll at the same time that significant changes were made to our accounts function who actually pay the amount into our pensions.  There are faults therefore on several sides, but the company has shown willing to solve the problem.  They have also asked me not to make it known to my colleagues that this issue exists till they have a solution to it.  I know that the company used to pay the saved NI into my pension, which many companies don't, and I know that I also used to pay an additional sum as a type of AVC into the pension.  Now the company is asking me to provide evidence of the arrangements regarding the sums paid into my pension.  Are they not responsible for keeping this information?  I do have some documentation to show the company's intention but that dates back nearly 20 years.  I am worried that if I present this I might not get as much as I was getting paid into my pension.

If you don't provide it then ultimately someone else will.

Inspector_Gizmo said:

Clearly I want to carry on working for this company and both sides want to resolve this, but should I be getting legal advice or should I be getting advice from a pensions expert?  

Legal advice on what? If the company is going to honour whatever it agreed with employees (and it certainly sounds that way), it's hard to see what you'd be instructing a lawyer to do.

Inspector_Gizmo said:

 How should I calculate the lost interest on each payment that was underpaid into my pension?

You don't have to. That will be for your employer to sort out with the pension provider - and it isn't about interest, it's about investment returns (assuming this is a defined contribution scheme, and it sounds as if it is?).

Hi ref first comment - the way the payslips were laid out changed.  We did query it at the time, but were told that there was nothing to be concerned about.  I had also had a pay rise which disguised the increase in my take home pay.  What would have helped would have been checking my pension online, and that is how I eventually spotted the mistake.  Ref third comment , you are correct, I don't mean interest, I do mean investment return.

Exodi

Marcon said:

Exodi said:

Marcon said:

Exodi said:

It's pretty incredulous that this 'affects almost everyone in the scheme' and yet seemingly no-one has noticed in two years until now. But then many take pensions seriously I guess.

Presumably if they haven't applied the sacrifice, then you were paid the amount in the your payslip so you are theoretically not worse off (though practically I appreciate you will be miffed you have paid tax, likewise employer miffed they have paid higher employer NI).

I think there's a 'not' missing in your second sentence!

If this was salary sacrifice, OP's salary will have been permanently and contractually reduced, so they won't have been paid a higher salary unless their contract was changed - ie they will have missed out on the employer contribution to the pension scheme, but not had a higher salary (assuming the company understands how salary sacrifice actually works, even if the implementation went wrong in terms of pension contributions).

Thanks, updated the first sentence - if only every one took pensions seriously!

If their salary was reduced the correct amount then it certainly makes the issue simpler to resolve at least (though bad for the company realising they've underpaid their staff for 2 years!). As an aside, at least in my experience with salary sacrifice, I'm the one informing the pension provider how much to 'take' via DD instruction (though this needs to be signed off, of course).

How would the employer go about reducing the salary sacrifice DD's without their employees knowledge or consent? Is a 'workplace salary sacrifice scheme' such a thing?

In a 'normal'(!) salary sacrifice arrangement, the overall monthly payment amount (whether by DD, BACS transfer or however the employer makes payment to the provider) is between the employer and the pension provider. Employees wouldn't know or have to agree the amount, because it's already been contractually established what their salary will be and how much they are sacrificing. If the employer messes up - as they have done here - it comes to light when either the employee or the employer wakes up and spots there's been an error.

I'm not too sure how your rather informal arrangement would be viewed by HMRC if it ever came to light, but maybe you are one of the 'exceptions'. See https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye and note particularly:

As a general rule, if an employee swaps between cash earnings and a non-cash benefit whenever they like, any expected tax and National Insurance contributions advantages under a salary sacrifice arrangement will not apply. There are some exceptions to this, Employment Income Manual 42755 gives more information.

Thanks, that's useful - I'm a company director but realise that my set up appears to be more the exception than the norm. I can make card payments in Vanguard as the employer, logged into my personal account so nothing to suggest it's untoward (I hope).

Thanks for the info though, it sounds very likely that the OP has had their pay deducted, but equivalent pension payment not made (which is a much simpler issue to resolve).

Hoenir

Inspector_Gizmo said:

I know that the company used to pay the saved NI into my pension, which many companies don't, 

Is this the crux of the issue. Was this arrangement ever contractually formalised? Or was it discretionary on the part of the employer. 

Marcon

Exodi said:

Marcon said:

Exodi said:

Marcon said:

Exodi said:

It's pretty incredulous that this 'affects almost everyone in the scheme' and yet seemingly no-one has noticed in two years until now. But then many take pensions seriously I guess.

Presumably if they haven't applied the sacrifice, then you were paid the amount in the your payslip so you are theoretically not worse off (though practically I appreciate you will be miffed you have paid tax, likewise employer miffed they have paid higher employer NI).

I think there's a 'not' missing in your second sentence!

If this was salary sacrifice, OP's salary will have been permanently and contractually reduced, so they won't have been paid a higher salary unless their contract was changed - ie they will have missed out on the employer contribution to the pension scheme, but not had a higher salary (assuming the company understands how salary sacrifice actually works, even if the implementation went wrong in terms of pension contributions).

Thanks, updated the first sentence - if only every one took pensions seriously!

If their salary was reduced the correct amount then it certainly makes the issue simpler to resolve at least (though bad for the company realising they've underpaid their staff for 2 years!). As an aside, at least in my experience with salary sacrifice, I'm the one informing the pension provider how much to 'take' via DD instruction (though this needs to be signed off, of course).

How would the employer go about reducing the salary sacrifice DD's without their employees knowledge or consent? Is a 'workplace salary sacrifice scheme' such a thing?

In a 'normal'(!) salary sacrifice arrangement, the overall monthly payment amount (whether by DD, BACS transfer or however the employer makes payment to the provider) is between the employer and the pension provider. Employees wouldn't know or have to agree the amount, because it's already been contractually established what their salary will be and how much they are sacrificing. If the employer messes up - as they have done here - it comes to light when either the employee or the employer wakes up and spots there's been an error.

I'm not too sure how your rather informal arrangement would be viewed by HMRC if it ever came to light, but maybe you are one of the 'exceptions'. See https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye and note particularly:

As a general rule, if an employee swaps between cash earnings and a non-cash benefit whenever they like, any expected tax and National Insurance contributions advantages under a salary sacrifice arrangement will not apply. There are some exceptions to this, Employment Income Manual 42755 gives more information.

Thanks, that's useful - I'm a company director but realise that my set up appears to be more the exception than the norm. I can make card payments in Vanguard as the employer, logged into my personal account so nothing to suggest it's untoward (I hope).

Thanks for the info though, it sounds very likely that the OP has had their pay deducted, but equivalent pension payment not made (which is a much simpler issue to resolve).

If you're a company director then hopefully it's simply a company contribution on your behalf (which is entirely the norm) and nothing to do with actual salary sacrifice - but you might just have a quick look at your terms of employment to make sure that's the case.