Can a company legally reduce pension already being paid?

jonestom · 1 March 2006 at 9:16PM

When I retired from my company, I received a small pension and bought extra pension with part of my taxed lump sum. I have been receiving this pension for just over 2 years. I received a letter from the company today outlining that the original poorly performing Administrators of the scheme have been replaced by new Administrators, who are performing much better now (that was the good news) the Trustees of the scheme asked that the previous pension calculations be reviewed and re-calculated, this was done and I've been told that I have been overpaid,the trustees have sought legal and actuarial advice on this issue and say they have no alternative but to reduce my pension, it's not by a great deal but there again the pension is only small. They also state that they will not be looking for repayment of the overpayment(they're all heart)
Can anyone give advice on whether I can challenge this or not?

Pal · 1 March 2006 at 10:32PM

You could try, especially if the revised pension will make life difficult for you to live on. Personally I would ask for a breakdown of the calculation and an explanation so that you can be sure that the figures are correct.

In practice you are not entitled to the overpayments, and you should count yourself fortunate that they are not attempting to recover the overpayment, but there is no harm in making them prove to you that their new figures are correct.

EdInvestor · 2 March 2006 at 10:39AM

How can there be "overpayments" on a final salary pension?

Surely it should be quite clear from the scheme booklet what you will get?

exil · 2 March 2006 at 1:31PM

He didn't say it was FS. Even if it was FS they could make a mistake in the calculation
if they're really inefficient (ie incompetent!)

jonestom · 2 March 2006 at 7:43PM

Thanks for the advice, I know I can always rely on this site for the best advice.
I've since found out from other retirees that they have had similar letters, in fact one has been 'underpaid' by £500.00 per annum and the company are re-imbursing him so I guess I am lucky that they're not pursuing me for any overpayments received.
I know it doesn't matter based on the comments received from Exil but It is a final salary scheme.
Regards Jonestom

Can a company legally reduce pension already being paid?

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