Pension contributions held within a company account while a group scheme is put in place.

darkgen

darkgen

darkgen

Soldato
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A quick one.

Question, in this interim period these contributions are being held/stored presumably within a company account until a scheme is in place. What happens to (does any) any interest accrued? Company is basically stating that no interest is accrued on pension contributions, ergo when the scheme is in place the funds, as a total, will be transferred across.

Nice eh.

Cheers, Paul.
 
Ahh, well I just re-read my opening line and it reads rather ambiguously. What I mean by total is the total of an individual’s contribution.

For instance, let’s assume this account contains all employees’ contributions for the last 6 months. This is a significant amount which I assumed accrues interest. Perhaps it doesn’t as indicated by the employer. However if so, that’s interest that neither I or other employees will see as and when the pension scheme has been put in place and funds transferred,

Clear as mud? I loathe the thought of this company nabbing interest from employees pension contributions or I'm way of base and this is entirely normal during this type of transition etc.
 
I imagine it all depends upon what you've signed up to. If the company is holding funds in an interest-paying account, then (assuming the balance is positive) those funds will accrue interest, but they may be under no obligation to pay that to you (or into your pension pot).
 
This is where it gets murky. I've been TUPE'd in to a company which did not have any type of group pension scheme. So as part of that legislation they are contractually obligated to provide a pension scheme. It's taken them 6 months and counting to get something in place and in the interim deductions is still being made to monthly wage's which is going somewhere! When you consider the number of employees that did TUPE across that equates to a significant amount.
 
I absolutely do not want to opt-out as TUPE also protects the employer % amount, which is higher than the standard (as well as the tax break).

I'm just a little bemused at the fact that until the company does present a pension scheme, all contributory deductions are sitting somewhere not working for me but potentially generating the company interest.
 
I'm not even sure how I would broach that. This new company is significantly smaller than my previous company of 20k+ employees to sub 200. The discussions I’ve had have been with the MD as opposed to finance or HR as the individuals for each directed me thusly!
 
This is unreasonable.
Normally schemes have 30 days to allow them to remit funds.

Why is it taking so long to setup?
Suggest you ask for a meeting, ask why there is a delay. Do they need help finding a scheme or what. Why can't they use the old scheme, assume its a person pension or is it a defined benefit?
 
Reasons given for delays include nuggets like "very complex situation" & "vitally important we get this right".

Suffice to say they engaged with a 3rd party planning advisor who made a recommendation which was agreed back in mid-October last year. As of yet we have to receive any documentation / pack details regarding this new scheme.

So 12 weeks later, I’ve engaged the MD again requesting an update. The previous scheme was a company group pension scheme and hence the configuration could not be transferred across. Although I do aim to transfer those funds to the new scheme as and when it arrives.
 
The main issue is whether the scheme is Money Purchase (DC) or Final Salary (DB).

Assuming it's DC, in normal circumstances contributions have to be invested by the 19th of the following month. Given that the scheme hasn't been set up yet, this obviously can't happen. If this is the case, the loss of investment returns is going to be a much bigger deal than the loss of interest on the contributions.

If it's DB then it doesn't matter as you just pay x% conts and the company picks up the rest. So the interest on conts will just be a part of the companies tab
 
It's DC, and what can I do but accept the loss in returns. It's beyond my control. I was angry, now I just want the thing up and running. If I get to 60 it will be a miracle anyways :)
 
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