TPO upholds complaint after employee’s contributions never reached pension pot

The Pensions Ombudsman (TPO) has ordered a firm to make up a shortfall in units and pay compensation after pension contributions were deducted from an employee’s salary but not paid into their pension scheme.

The firm, Property Maintenance & Repair Team Ltd, was ordered to pay the staff member, Mr K, £500 for the “significant distress and inconvenience” he experienced as a result of the failure.

Mr K said that missing contributions came to around £8,500 across the whole of his period of employment. He began working for the firm in September 2016 and was made redundant in June 2021.

TPO said that Mr K had provided copies of some of the payslips from the period between December 2020 and May 2021 showing pension contributions deducted from his pay, amounting to £309.89, and the corresponding employer contributions; Mr K said that the payslips showed only a selection of the contributions that were unpaid.

In June 2022, TPO sought a response to the complaint from the employer.

However, the case was made more difficult as the owner of the firm was seriously ill in hospital when TPO’s request for a response to the complaint was sent. His wife, registered on Companies House as a director of the firm, responded to TPO’s request as a representative of the employer, but was unable to demonstrate that the contributions had been paid.

While the case proceeded, the owner of the firm was moved into a hospice for palliative care.

Amid these difficult circumstances, TPO’s caseworker concluded that “further action was required by the employer as it had failed to provide evidence that it had remitted all the contributions that were due to the scheme.”

TPO also said in its report that the caseworker had “no reason to doubt the evidence provided by Mr K and the employer failed to provide evidence to the contrary.”

Given this, it was of the opinion that “it was likely that contributions has been deducted from Mr K’s salary which were not remitted to his scheme. This amounted to maladministration by the employer.”

The caseworker subsequently recommended a payment of £1,000 to the employee in recognition of the distress and inconvenience faced by Mr K.

However, the ombudsman reduced this amount to £500 in light of the “difficult and challenging circumstances”.

Despite this, the ombudsman clarified that while this was “clearly a difficult time” for the firm’s representative, “the employer still had a responsibility to pay all contributions into the scheme.”

Given this, he ordered the employer to provide Mr K with a schedule of the employee contributions deducted from his pay, and the corresponding employer contributions due into the scheme.

Once the employer has confirmation that Mr K agrees with this schedule, it will be required to pay the missing contributions to the scheme.

It will also need to establish with the scheme whether the late payment of contributions has meant that fewer units were purchased in Mr K’s Scheme account than he would have otherwise secured, had the contributions been paid on time, and pay the cost of purchasing any additional units required to make up said shortfall.

    Share Story:

Recent Stories

A time for fixed income
Francesca Fabrizi discusses fixed income trends and opportunities with Goldman Sachs Asset Management Head of UK Pensions Solutions, Fixed Income Portfolio Management, Henry Hughes, in our Pensions Age video interview

Purposeful run-on
Laura Blows discusses purposeful run-on for DB schemes with Isio director, actuarial and consulting, Matt Brown, in Pensions Age’s latest video interview
Find out more about Purposeful Run On

Keeping on track
In the latest Pensions Age podcast, Sophie Smith talks to Pensions Dashboards Programme (PDP) principal, Chris Curry, about the latest pensions dashboards developments, and the work still needed to stay on track
Building investments in a DC world
In the latest Pensions Age podcast, Sophie Smith talks to USS Investment Management’s head of investment product management, Naomi Clark, about the USS’ DC investments and its journey into private markets