Pension Foulup

[Gardian]

I've put this under 'French Finance' because it's the kind of thing that could affect any of us who are retired and receiving an occupational pension from the UK.

Some months ago I received a notification from one of my pension providers which described a debacle of incorrect payments going back to the mid-90's. Overpayments for some, underpayments for the majority. In some cases, overpayments of lump sums of the order of 30%. When they realised the scale of the problem, there must have been blood on the floor within that organisation's pension fund.

I've just received a letter telling me that there's been an overpayment and that they'll be clawing it back over the next two years. No problem for me: the sum is quite small and I have no intention of quarrelling.

I'm just interested though. For some in 'overpayment', the impact is likely to be significant. For me, a small % on a small pension and the impact is negligible: for someone else, a higher % on their main income at a difficult time like this ............

What's the legality of this? Surely the written offer of a pension constitutes a contract which is binding on the provider? You can't turn round 10 years later and say "Sorry, we got the numbers wrong and we're going to take the money back".

Any thoughts?   

[idun]

The pension lump sum is something that I have only found about recently.

IF I thought that the UK and Irish housing market were 'mad'  and unsubstainable, then the notion of a pension lump sum seems like utter unadulterated lunacy to me.

It isn't as if they haven't known that there would be a pension problem in the future, they have known for many years, so why have they been paying out huge lump sums, or any lump sums? Tis beyond me. Got it wrong, yes, they have from my long long non uk residence, got it all wrong and still are.

 

[Mikep]

The lump sum doesn't cost the pension fund any more - they simply calculate the net present value of 25% of all future payments, and pay that today instead of over the next thirty years.

It does cost the govermnent in income tax, which is why you might see lump sums abolished or undermined by tax in the near future. Lump sums are already taxable in France for those tax-resident here.

[Rabbie]

[quote user="idun"]

The pension lump sum is something that I have only found about recently.

IF I thought that the UK and Irish housing market were 'mad'  and unsubstainable, then the notion of a pension lump sum seems like utter unadulterated lunacy to me.

It isn't as if they haven't known that there would be a pension problem in the future, they have known for many years, so why have they been paying out huge lump sums, or any lump sums? Tis beyond me. Got it wrong, yes, they have from my long long non uk residence, got it all wrong and still are.

 

[/quote]AFAIK the 25% lump sum only applies to pension schemes where you build up a pot of money to buy an annuity with when you take your pension. I was advised it was a good idea to take the lump sum because then it was not tied up like the annuity and could be invested to provide additional income.

[idun]

This makes as much sense to me as if you had written it in mandarin.

Doesn't cost any more to the pension funds? And we keep hearing of pension fund short falls so how can they can afford to preempt people's life expectancy and pay in advance?

 

Please no one even try and explain why. This is as ridiculous as the cost of housing being about 7 times the average salary these days in the UK. I'll never be well off. I didn't live in the UK during Thatcher or Blair years, I have no idea about the looney greed mentality and when I saw friends and family infected with it,  it was and is distasteful to me.

 

 

[mint]

[quote user="idun"]

Please no one even try and explain why. This is as ridiculous as the cost of housing being about 7 times the average salary these days in the UK. I'll never be well off. I didn't live in the UK during Thatcher or Blair years, I have no idea about the looney greed mentality and when I saw friends and family infected with it,  it was and is distasteful to me.

 

 

[/quote]

Oh, id, how what you say is something that ultimately persuaded me to get right away!

I saw the naked greed, materialism, whateve-you-want to call it amongst friends, relations, colleagues, my OH's clients, etc etc.  It seemed to have "infected" everybody and was a truly horrible thing to be surrounded by.

You couldn't go to someone's house for dinner without their wheeling out all their best crocks and eating irons and without being regaled with stories of their latest acquitsition or purchase.

At work, I had colleagues who were taking out bank loans for boob jobs!

Then, when my cleaning lady started going on cruises and showing me all the finery she was buying in order to sit at the captain's table, I knew that I was definitely a square peg in a round hole.

Then, when OH said at last that he was ready to retire, having helped a fair few people to become millionaires through their property portfolio (yes, OH was in that industry but had been for about 50 years at that time and had seen all the different cycles of the property market), I couldn't wait to get right away from people (yes, I do mean ALL people).

It was the only way, I think, to save my own sanity.

[Pommier]

[quote user="sweet 17"]

Then, when my cleaning lady started going on cruises

[/quote]

I'm not being funny, but why shouldn't your cleaning lady go on cruises?

[Jay]

[quote user="sweet 17"]

Then, when my cleaning lady started going on cruises and showing me all the finery she was buying in order to sit at the captain's table, I knew that I was definitely a square peg in a round hole.

[/quote]

What a real pain, our butler used to go away for three weeks at a time on cruises. The cleaning staff could never afford it though!

[Gardian]

Anyway ................... to return to my original question, having since read the pensions Advisory website, I think that I have the answer.

It appears that there is nothing to prevent a pension fund seeking reimbursement of any benefit paid in error.  The only caveat is if somebody had spent the money and had no reason to believe that they had no entitlement to those funds.  Also, any reimbursement would have to be made (normally) over the period that any overpayment had taken place (unless the sum involved was insignificant, as in my case).

It's a bit like a retailer contacting you 3 yrs after you'd bought a washing m/c and saying that they'd undercharged you by £50 and having a legal right to exact that money from you.[blink]

[idun]

[quote user="Pommier"][quote user="sweet 17"]

Then, when my cleaning lady started going on cruises

[/quote] I'm not being funny, but why shouldn't your cleaning lady go on cruises?[/quote]

 

I don't mind if cleaning ladies go on cruises and sweet didn't say she minded either. I have friends who are cleaning ladies in France and they deserve their holidays, just like everyone else. Incidentally, cruises are not necessarily an expensive holiday option.

edit, I said friends in France, I should have said GOOD friends in France who are cleaning laides.

 

[Pommier]

I obviously misinterpreted the tone of Sweet 17's posting!

[mint]

Ah, yes, my cleaning lady who became one of our most trusted friends......  OH would even trust her and her husband with looking after our dog when we came on trips to France to look for houses (and that's saying something, I can tell you).

Of course, they've been out to see us and the dog and so I had no problems with whichever way she chose to spend the pittance (well, it was not a lot above minimum wage) that we paid her.  She never wanted to be paid more and we used to "make it up" by buying them lovely presents for birthdays and Christmas, etc.

My statement was one of 2 or 3 statements that I made to demonstrate what idun had said about greed and so on.  Not that my dear friend and cleaning lady is greedy, far from it.  It's that I find people's expections of changing kitchens, 3-piece suites, plastic surgery, having exotic holidays as a norm and something to aspire to quite weird and very sad.  Just my personal view of course and I did feel that our own lifestyle was completely at odds with our friends and yes even our families'.  And, indeed, even here in France, I am sure many in our own little village think we lead a very uninspiring and dull life because we haven't taken a holiday this year and haven't talked of "going home for Christmas".

Pensions foul-up is more than that described in fact.  And, yes, I know about that as well.  OH had his pension with Equitable Life. 

I might not always spell things out so that's my fault I suppose, but I always assume that people would get the gist of what I say. 

 

[Benjamin]

Gardian

Try to be a bit more creative in the title to your thread.

"Sex Scandal in the Pension Industry" should attract more interest. As it is, your thread has been hijacked for their own ends by other posters who, openly, have admitted that they do not understand anything about your post. Shame really as it opens up the wider question of further dubious practices by the finance industry. No doubt they have it covered in the small print somewhere.  [6]

[Russethouse]

 We once had a loan with a well known finance company, at the end of it they said we had overpaid, I was convinced they were wrong and told them so, but despite this  they refunded the money. A few months later they realised their error, and wanted the money back, they were told politely to take a hike......never heard another word.

Similar thing when we came to buy the car we had previously leased (what a mistake that was) They sent a final bill which we questioned, they insisted that was the total balance and we sent a cheque 'in full and final settlement' later they wanted extra for mileage......they got a similar reply - similar response.....

Of course in those cases we had the money, in the case of the pension the pension company have it, (possession is nine tenths of the law) but for those badly effected it might be worth contacting the ombudsman

[Gardian]

[quote user="Benjamin"]Gardian

Try to be a bit more creative in the title to your thread.

[/quote]

Benjamin ...............

I'll try to do better next time!  [:)]

In fairness, I'm as guilty as most of 'thread highjack', but this particular situation is one that I feel strongly about.

The Company concerned was a very big name which went under a decade or so ago: the man who ran it for years would be turning in his grave at what happened.

I was only there for a few years, but what occurred will feature in any 'Business Blunders' book. I knew people who had bought shares for years on a 'buy as you earn' scheme: they ended up with nothing.

[mint]

It makes me mad and sad in equal measure when people lose part or all of their pension that they did without so many things in order to pay into.

The Maxwells, etc......eating up by fishes was the least of his worries in the end.  I think some of the people whose pensions he appropriated would have liked to do far more to him had he lived.

It seems to be one area (and governments are as guilty as others) where you can just move the goal posts to suit yourself and pay no heed to the people whom you have harmed.

[Araucaria]

Gardian - it might just be worth trying a very simple letter that says:

When you received the money you had every reason to believe it was yours to spend, so you did so, and .....

It would now cause you hardship to have to repay it, even by instalments.

If it is really a small amount in total, then it won't cause the pension provider any hardship if they don't get it back. And you can always give it to a charity of your own choice if you don't want to keep it.

[Gardian]

Araucaria ............

As I said right at the beginning of this thread, the amount involved for me is very small and I have no intention of quarrelling - life is too short!

My point in all this was the outrage that I feel over the 'take it or leave it' attitude of the pension provider, which will affect many, much more than it affects me. Imagine your principal provider turning round and saying to you that you're going to experience a 3% drop in income for the next 5 years?

For me, this pension represents 10% of my income and it's only for 2 years, but for some it'll be much worse.

Where were the actuaries / auditors in all this over the last 15 years? As somebody said, the financial services industry has a lot to answer for.

[cooperlola]

As with R/H's examples, if this were a normal business you'd be well within your rights to tell them to stick it up their....  I agree, Gardian, it seems scandalous that these people can get away with what is clearly their mistake.  Do we now all have to check our pension provider's sums?  It does stink, you are right.

[Stan Streason]

[quote user="cooperlola"]As with R/H's examples, if this were a normal business you'd be well within your rights to tell them to stick it up their....  I agree, Gardian, it seems scandalous that these people can get away with what is clearly their mistake.  Do we now all have to check our pension provider's sums?  It does stink, you are right.[/quote]

The problem is that it is not the money of the people making the mistake.  A company fouls up then they rightly take the consequenses but when the mistake means there is no money left to pay someone elses rightful pension?  There is no good answer to this but having the right to claw back overpaymments is probasbly the least worst.

[cooperlola]

Good point, Stan. 

I hope at least that those who caused the fouls-up (foul-ups?) and "missed" them for so many years lose their jobs - oh, and their pension rights too, perhaps?