Pensions and a non maths brain...

[Caenlochan]

Apologies - my maths is appalling so I might have this wrong but I would really appreciate your thoughts...

Since 1999, my employer paid 4% to match my contribution to a Standard Life pension. This was in my original contract. In 2017 they set up a new pension with Nest and we all switched to this leaving the Standard Life pension where it is. I've only just realised that they now pay 4% on the "qualifying earnings" of my wage which is anything over £6240 whereas before the contribution was based on my whole wage - 16k.

I don't remember this difference being discussed at the time and I don't have anything in writing from them - only the welcome from Nest which doesn't mention this. As far as I can see I've missed out on £1000 in contributions from them since 2017 due to this change and I have failed to pay in the matching sum as my contributions are also only 4% of the qualifying amount.

Does a Nest pension have some magic thing that I'm missing here or have I had a pension cut?

No idea, but bumping for you as I read all things pension related. Does seem very unfair though if this is right.

I have a Nest pension and it's calculated on my whole salary, if that helps.

I've just googled it and the minimum pension a company can pay is on qualfying amount between £6240 and £50,000. So basically, your co is paying a % on the legal minimum amount.

But they are paying 4% when the employer contribution legal minimum is 3%.

Yep they’ve reduced their contribution. Cheeky fuckers.

Thank you both, @MintJulia yes - that's a good point - it could be worse they could have switched to 3% of the qualifying amount!

@WutheringHeights66 - thanks, I thought it was a bit unfair too.

They are paying a little more than the minimum but it does still seem like it's effectively a cut to our pensions that they didn't disclose and I was too stupid to notice the difference in contributions until now.

If I leave things as they are I stand to have £10k less in what is already a fairly feeble pension by the time I retire.

I'm guessing that since the 4% was in my original contract and I don't have anything in writing notifying the change then it would have been an issue but as we have accepted it since 2017 it's now adopted as practice?

@Dindundundundeeer Yes! Just so annoyed at myself for not spotting it sooner. I will query it though, will be interesting to see what they say...

You should definitely raise it if your contract says 4% on whole salary.

I can understand not spotting the employer contributions had dropped, but didn’t you notice that your own contributions had dropped? That would have made your pay increase, surely you noticed that?

When they switched to Nest were you given a choice whether to move to Nest or stick with Standard Life? If you had a choice to move then it’s likely this was in the documentation and you’ve therefore accepted it (rubbish of them not to point out the implications to you though). If there was no choice involved and you were just told it was happening that’s different but then it comes down to what’s in your contract and what information they gave you at the time of the switch.

Thanks @ChessieFL. I don't have any documents from my employer covering the changeover apart from a notice beforehand about auto enrolment which states, "If you are already in our pension scheme you will not be automatically enrolled as you are already in the pension. is working to ensure we meet our legal requirements as an employer and doing our best for you as our employee, you can rest assured that your pension will meet or exceed the government's requirements. There may be changes to your contribution rates, but this will only be done to ensure the compliance with the new legislation. The only time we will increase your contribution amount is if it is below the lowest value the new legislation will allow."

It later says, "...you need to submit in writing, a letter or electronic form to us. For legal reasons the details you send must contain the phrase 'I confirm I personally submitted this notice to join a workplace pension scheme'.

I can't fully remember but at the time we had the pensions administrator visit us to talk it over and it was all very relaxed and positive. I can only guess that we all then emailed our confirmation.

The difference in my contribution at the time was £14 per month which I just didn't spot - I would have checked the topline and not the deductions

I suspect as you confirmed your approval to join they have probably covered themselves, but obviously the difference in the contribution rate wasn’t made clear enough. You should definitely complain but depending on exactly what happened/what you were told at the time of the changeover they may not have to change it.

Thanks all, will reply back after I speak to them which will be in a few weeks time as my boss is off on holiday. Again.

Well that took a ridiculous amount of time to sort out, apologies for the very late reply!

I queried it with my boss who took the stance of "I don't know, it was 5 years ago, I don't have any paperwork" he then said to put it in writing in an email and he would send it to the accountants.

A stupid amount of back and forwards then took place whereby the accountants said, "it's still 4% as previous", my boss said, "it's still 4% as previous" and I had to show them it wasn't. I am really sh*t at maths but I can work out 4% of a total monthly wage.

They eventually conceded that a mistake had been made and my employer finally agreed to pay the missed contributions in a lump sum. It took the accountants a couple of goes to figure the amount out - they originally made the calculation thinking that everyone's amounts would be different due to overtime etc not realising that the amount is the same for everyone because it's on the first £6k of earnings and we're all on the same rate.

So, the missed payments are finally going in and we have the option to replace our missed contributions too.

And yes, I now check my payslip properly...

Amazing result, well done for challenging it - hope your colleagues are grateful!

Well done - what a great outcome!

Not wanting to be insulting, perhaps you love your job but I reckon you could get a job paying more than £16k using your attention to detail and articulate, persistent reasoning!

Thank you @madrush Disappointed at how employer and accountants responded but glad it's sorted now. Colleagues either thought I would be to blame if we didn't get a wage increase this year or that our boss is a great guy for paying it. Hey ho - wonder why I like WFH...

Great result Caenlochan

Thank you @Chasingsquirrels that's much appreciated!

@Chewbecca thank you! Ha ha, not insulted at all - that's cheered me up during a slightly crappy day 😁