Pension mistake back payment ; Wee Gord !

Ex Footy Legs

Ex Footy Legs

Well-known member
This is a shout out to the pensions expert on here ??? I’ve forgot; is it weegord ?

I’ve just received a cheque out of the blue! from a company scheme I was in back in 1998 (Just over £1000) whereby the pension company (well known one) has sent me a letter saying sorry about keeping my funds with this cheque and some interest.
Having calculated the interest I have concluded they’re offering 2.3% per year for 21 years.
Id like some guidance on whether they are obliged to offer a pension low % market rate as a minimum of 5% rather than the current offer ?
Or whether, if I challenged this then the pension ombudsman would award me more interest?


thanks 👍
 
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I plan to do that but wondered if I have any rights given they’ve had my money for 21 years and would’ve earned 5% min per year elsewhere
 
If it was a contribution based pension then I would imagine what they have given you is based on the amount you had invested when you left and the growth of the fund it was invested in. If this is the case then you can't just assume 5% per year growth.

If they should have paid it to you ages ago then you may be entitled to some sort of compensation on top.
 
Without saying it directly their compensation is the interest (their chosen rate!) they have offered. I’m just stating; can I justifiably ask for more than the 2% they’re offering
 
Thanks Gaz

this wasn’t mis sold just that they didn’t know they had it, I thought it had been transferred when I moved companies in 1998 but they just kept it. Obviously found it and had to come clean.
I think you should get the lowest typical market rate of 5% and wondering what my rights are and if the pension ombudsman would rule 5% given they’ve had my money for 21years.
 
Defined benefit or defined contribution scheme? I would have thought a DB would be worth far more. Saying that I’m not a pension expert but I recently discovered a DB pension i didn’t know I had and which I’d only been in for a couple of years back in late 90s and was shocked (in a good way) by its value.
 
If it's a defined benefit pension then the value is a function of the liability the pension provider incurs to provide you with a pension for the rest of your life. So if your pension is (say) £10k per year and you are 55 years old, then the pension company has to assume you'll live for about 30 years. So their liability is £300k. They'd try to extinguish the liability by offering you somewhere between £200k and £250k to go away.

I'd guess this is just a money purchase scheme though, so the £1k just is the balance of the account left over. If this is the case then you should work out what return the rest of that money has managed over 20 years then ask the pension company to match that. So if the rest of your money has doubled over 20 years, that's about 3.5%pa and you should ask the pension company to match that.

Some pension expert might know what (if any) regs cover this eventuality.
 
In relation to the plan name ; it says on the letter;

‘’ XXXXX Ltd Retirement & Death Benefit Plan.

We made a mistake that meant that the payment we made on 31st March 2998 from the above plan was too low.
We’re sorry this happened. Please find enclosed a cheque for £1308 for this underpayment, including £644.69 in late payment interest. ‘’

When I moved companies in June 96’ they obviously transferred too low an amount in March 98’ from my pension versus the right amount.
it smells funny to me. I’m going to ring them but want to know my rights before getting in touch.
 
Okay, depends on how your pension performed at the new company it was transferred too. I suppose if you could prove the performance of the pension you could go back to them and make a complaint.

If you pension outperformed the 2% then you have been financially disadvantaged because of their error

They’ve corrected it by sending the money and completed compounded interest at 2%, maybe based on RPI average.

I wouldn’t cash the cheque as if you do it could be seen as acceptance of then money
 
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Ex Footy Legs said:
In relation to the plan name ; it says on the letter;

‘’ XXXXX Ltd Retirement & Death Benefit Plan.

We made a mistake that meant that the payment we made on 31st March 2998 from the above plan was too low.
We’re sorry this happened. Please find enclosed a cheque for £1308 for this underpayment, including £644.69 in late payment interest. ‘’

When I moved companies in June 96’ they obviously transferred too low an amount in March 98’ from my pension versus the right amount.
it smells funny to me. I’m going to ring them but want to know my rights before getting in touch.
Click to expand...
That seems to be annual compound interest of approximately 3.1%. Bank of E average inflation rate was 2.8% over that time.
 
Before they do this kind of thing they have their legal and communication teams all over it.
They will have made many errors (read about quite a few lately) and they would have to demonstrate fairness.

I’d be contacting them asking them to justify the rates they have come up with.
 
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