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.

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