Pension Advice Please

[Paigntonian]

Finished a short-term contract with the DWP. They are happy to refund my pension contributions of £253. They won't give me the £1,800 that the DWP paid in employers' pension contributions. Are they in the right?

[Hymie]

There is no need to rush a decision on this – get information on all the options open to you by the pension scheme’s rules and then make an informed decision.

Almost certainly the worst decision you could make would be to claim back your contributions and miss out of the £1,800.

[Hymie]

This posting has got me thinking, how did Paigntonian know that he could claim his pension contributions back?

If the DWP advised him of this option, they were being very disingenuous in not advising him of other (better) options.

Imagine they had said – you can have your £253 contribution back, or alternatively you can have 25% of the pension value tax free (£513) and a pension for life – which would you like?

I would be very interested to know if the DWP dangled the carrot of the contributions refund without mentioning other options.

[Paigntonian]

Thanks Hymie and all.

[bobbinwales]

Hymie, if its the old fashioned average/final salary defined benefit schem then yes its up to the employer as its there scheme to set out the options. But if its anything else in my experience employers take a hands off approach for money purchase direct contribution schemes and the more recent workplace pensions with NEST etc. Employers leave it to the employee /leaver to sort it with the pension provider.
Good luck Paingtonan. We dont know the details of that DWP scheem but we agree you need to find out all the options and we think its likely that the worst option is to ask for your £253 back. Let us know how you get on??

[bobbinwales]

oh dear, managed to spell scheme in 3 diffrent ways there!

[Hymie]

I would still like to know how Paigntonian found out that he could claim his pension contributions back.

If he were to take this option, the big winner would be the DWP who would get their £1,800 pension contribution back (either from their own scheme, or from the third party pension provider).

While the DWP is not required to advise Paigntonian of all his pension options available from the scheme, and they certainly cannot give financial advice in relation to the pension – but to make an offer of the worst option available to persons who have paid into the DWP pension scheme is clearly not in the interest of their staff.

[bobbinwales]

Agree, but am guessing Paintonian just asked HR if he could have it back. A remember getting one of mine back about 30 years ago after working only a few months in a final salary scheme with employer contributions and no-one gave me any other options, they just give me the money back

[Hymie]

But if Paigntonian requested his pension contributions back, why would he expect this to include the £1,800 contribution from the DWP?