HMRC shouldn’t go ‘poking the hornets’ nest’ on reduced state pensions

HMRC were going to tell everyone who had been, according to their records, contracted out of state pensions between 1978-1997 that their state pension would be reduced, and where the corresponding replacement pension was going to come from.

This all sounds fine in theory. However, after 'reconciling' HMRC records with private sector pension schemes’ records, we find that it is unclear what happened to many people. If HMRC simply tells the affected person that their state pension is reduced and advise them to seek recompense from a named scheme, it is likely to cause a flurry of complaints against the schemes, which will be in some cases unfounded.

It doesn’t seem fair for HMRC to take on the mantle of, in effect, a power to rule on what happened, when their own records are in just as much of a muddle. The problem is that we are talking about paperwork that may or may not have been properly completed, whether at the scheme administrators’ end or the tax authorities, some 20 to 40 years ago.

It seems a wise move for HMRC to leave it for now, rather than go poking the hornets’ nest. If HMRC is able to complete the process of reconciliation by Summer 2018, as has been planned, many cases may be resolved in the final stages of the game, which involves matching up members who changed jobs with schemes they may or may not have transferred to. People involved with the process in the administration sector are starting to think that the deadline will have to be extended beyond summer 2018 and more resources be made available in HMRC.

    Share Story:

Recent Stories


Sovereign bonds and climate change considerations
In Pensions Age's latest podcast, Laura Blows is joined by Hilary Norris, Product Manager, Sustainable Investment, EMEA, FTSE Russell, to discuss sovereign bonds and climate change considerations

Climate Investing
Laura Blows speaks to Aled Jones, Head of Sustainable Investing for Europe at FTSE Russell, and Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, about the role of climate investing within a pension fund portfolio.

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks