Transfer/Refund of contributions.

illuminate

In 2006 I took a job outside of my normal industry for a bit of a break while I re-assessed my career path.

This job was always going to be a short term option, but did come with pension scheme. Under the circumstances I opted out, but only after I had made 2 months payments. I had forgotten all about this until I was going through some paperwork recently.

Approximate figures are as follows:-
My total contributions - £60
Employers contributions - £180

I wrote to ask if I could have a refund of my contributions and without any further questions I received a cheque for £25 by return.

Now while I understand that I would not be entitled to any of my employers contributions and that the final figure would also be subject to tax, what I don't understand is the deduction of a further £30. They say something about it being due to me being contracted out of the SSP during this period. So where have these funds actually gone ?

They also say in their letter "as I have chosen not to transfer the benefits". Now I was never aware that this was an option. Are they suggesting that I could have transfered the benefits in full c/w employers contributions and everything else...... i.e. the full £240 somewhere else. If so where, how.... and have I now lost that opportunity as a cheque has been issued ? (I've not banked it yet)

I actually have 3 other funds accumulated from different employers over the last 20 years or so, each with only several hundred pounds in it. I have just left them alone since I knew there was no option of a refund. However it strikes me as stupidly in-economical having all these different schemes sitting there. Would it not be better if I could just lump these all together in one place ?

I am currently contracted out of SSP and have been for quite a number of years.

(Just a quick note..... this isn't about the pros/cons of contracting out, just what to do with company pension schemes if you leave your employer after a short period of time)

jonathon_hart

Hi. Was it a defined contribution scheme (as oppose to a final salary scheme). If so then the refund would be based on the disinvested value of your contributions and not the contributions themselves. This value would then be taxed at 20%.

If you are definite that they never informed you of the transfer option then you could try complaining on the basis that you were not informed of the alternatives. If there is a letter informing you of the option (but you missed it in the letter) then there is nothing you can do.

EdInvestor

The extra payment is to return the contracted out rebates to the Government so you are contracted back into S2P in respect of the period.

You have a had a choice of taking a transfer but only very recently.

illuminate

OK..... You've not quite answered my query.... but bear with me.... coz if I had the slightest understanding of pensions I wouldn't be asking....lol

The refund matches up entirely with the refund (so i guess this means its a final salary scheme).... until they made the further deduction that I detailed.

Edinvestor... are you suggesting that this deduction was refunded to the govt ?..... but if I'm contarcted out, why would it go to the govt. ?

exil

Because now you are contracted in for the relevant period.

EdInvestor

illuminate wrote: »

Edinvestor... are you suggesting that this deduction was refunded to the govt ?..... but if I'm contarcted out, why would it go to the govt. ?

If you are contracted out the Government pays a rebate of your national Insurance contribution to the contracted out pension scheme.If you then leave as you have, the scheme needs to repay those rebates to the Government which will then reinstate you into S2P for the period you were formerly contracted out, so you don't lose.

So it looks as though you have been contracted in, not out, since that time.If you want to contract out into a different (personal) pension, you'll need to sign a new form.

illuminate

Now I'm even more confused

I contracted out years ago...... Allied Dunbar, latterly Zurich. I know this as I get a reminder every year asking me whether I want to contract back in, as circumstances may have changed. So what on earth is going on

EdInvestor

illuminate wrote: »

Now I'm even more confused

I contracted out years ago...... Allied Dunbar, latterly Zurich. I know this as I get a reminder every year asking me whether I want to contract back in, as circumstances may have changed. So what on earth is going on

This could just be a form letter sent to everyone.What you need to check is whether your annual NI rebate is being paid into this pension - IIRC it should arrive around Sept/Oct.If it is arriving, then you are still contracted out.

If the rebate isn't arriving then what will (probably) have happened is that your rebates were switched from AD to the new company pension, but never paid into that because you were there only briefly. And now the company pension has contracted you back in ( there is no mechanism for the company scheme to transfer your contracted-out status back to AD).

You can check if you are contracted in by asking here:

https://www.thepensionservice.gov.uk

If you are back in and want to opt out again, AD should have the relevant form you need to sign.

Pensions weren't meant to be easy, you know.