UK Retirees to face cuts in Pensions

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StevePIraq
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UK Retirees to face cuts in Pensions

Post by StevePIraq » Sun Jun 17, 2018 4:18 pm

A bit disconcerting for some retirees.

Huge data checking exercise finds mistakes in pension payments
Thousands of retired workers face cuts to state or workplace pensions
But some ex-employees may have their pensions increased

Read all about it.


https://www.ft.com/content/0bbd7a72-6a5 ... cfcfb08c11
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Re: UK Retirees to face cuts in Pensions

Post by Felipesed1 » Sun Jun 17, 2018 5:07 pm

It is behind a paywall.
Can you copy and paste please?
Thanks

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Re: UK Retirees to face cuts in Pensions

Post by Big Boy » Sun Jun 17, 2018 5:25 pm

I couldn't see it either :cry:
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Re: UK Retirees to face cuts in Pensions

Post by Dannie Boy » Sun Jun 17, 2018 6:14 pm

I managed to find a copy



Huge data checking exercise finds mistakes in pension payments
Thousands of retired workers face cuts to state or workplace pensions
But some ex-employees may have their pensions increased
Rodney Smith, a retired economist living in Scotland, is one of a growing number of ex-civil servants receiving unwelcome letters from their former employer.

He was told by the Northern Ireland civil service pension scheme last December that it had overpaid his retirement benefits by about £1,800, and that it would seek to recover the money.

“I was rather angry to receive the letter,” said Mr Smith, 73, who was deputy principal economist in Northern Ireland’s education department between 1990 and 2005. “I wrote back to them immediately. It should be their responsibility to pay the correct amount. I . . . should not have to repay it.”

Mr Smith’s stance has so far resulted in him not receiving a further demand to repay the £1,800, although his monthly pension was cut going forward as it was reset to the correct amount.

Across the UK, tens of thousands of former workers are expected to receive similar unsettling letters — both from their ex-employers’ retirement schemes and the government, responsible for the state pension — advising them that their payments were wrongly calculated.

For some retired workers it will mean demands to reimburse pension overpayments, while others are expected to be told to expect lower retirement benefits going forward. But certain individuals are likely to see their pensions increased after discovering they were underpaid in the past.

“There are going to be some winners and losers,” said Chris Tagg, partner with Barnett Waddingham, the professional services firm. “Pensions may increase, but others may see reductions in their monthly payments due to errors.”

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State pension
UK retirees face state pension cuts after review uncovers errors
The errors were identified in a huge data checking exercise involving the records of thousands of public and private sector defined benefit pension schemes, and figures held by the UK tax authorities.

The reconciliation exercise has thrown up thousands of discrepancies in the way workplace pensions were calculated for millions of employees who “contracted out” of accumulating additional state pension through a government scheme sometime between 1978 and 1997.

Focus on Guaranteed Minimum Pension
At the heart of the errors is the Guaranteed Minimum Pension (GMP), an income promise that workplace schemes had to make to those who opted out of the State Earnings Related Pension Scheme (Serps).

The GMP is supposed to be the equivalent to what an employee would have got from the additional state pension, had they not paid lower national insurance by contracting out of Serps.

Some schemes are choosing to write off historic overpayments. But some may stick to the scheme rules and seek overpayment

Matt Ashton-Smith, Aon
When contracting out ended in 2016, public and private sector schemes were required by the government to match their GMP records with the national insurance figures held by HM Revenue & Customs — a highly complex exercise made more onerous due to inaccuracies in documents, and missing paperwork.

The work has identified over and underpayments of GMP, which has consequences for individuals’ state pension.

This is because when a person’s GMP changes, it affects how much the Department for Work and Pensions calculates the individual is entitled to as state pension.

“Any increase in the amount of GMP [from the workplace scheme] is likely to lead to a reduction in the state benefit — and vice versa,” said Philip Titchener, senior director at Willis Towers Watson, the professional services firm.

Government response to pension overpayments
The Department for Work and Pensions said it would not seek to recover overpaid state pension that is linked to GMP errors.

The department said “most queries” raised as part of the reconciliation exercise would not have an impact on the amount of an individual’s state pension.

It could not say how many people would be affected. It also could not say how much a state pension might be reduced by in the future, or increased by — depending on whether an overpayment or underpayment has been identified with GMP — because this will hinge on an individual’s circumstances.

But with millions of records reviewed, Steve Webb, a former pensions minister and now director of policy with Royal London, an insurance company, estimated tens of thousands of retired workers could see their state pension reduced.

Workers who are yet to retire could also see their future pension — both state and occupational — adjusted to take account of GMP errors.

While some public sector retirement schemes are reassuring members that they will not claw back overpaid pensions, those in private sector plans are so far not being given the same comfort.

Retirement schemes face difficult decisions
“[Pension scheme] trustees will have a lot of difficult decisions to make about how they deal with overpayments,” said Matt Ashton-Smith, a GMP specialist with Aon, the professional services firm.

“Some schemes are choosing to write off historic overpayments. But some may stick to the scheme rules and seek overpayment.”

Experts said they were already hearing from people who, like Mr Smith, are angry after receiving letters demanding repayment of part of their pensions because of GMP errors.

“We do . . . hear about some very stark letters which can upset, worry [or] anger the [pension scheme] member,” said Michelle Cracknell, chief executive of the Pension Advisory Service, the government-backed body that helps people who have problems with their pensions.

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Re: UK Retirees to face cuts in Pensions

Post by handdrummer » Sun Jun 17, 2018 7:02 pm

What about the people who made the errors, will they be held accountable? Oh, excuse me they were/are government employees.

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Re: UK Retirees to face cuts in Pensions

Post by HHTel » Sun Jun 17, 2018 9:16 pm

Well my state pension has been frozen for the last 7 years. It would be nice (very) if they compensated all those with frozen pensions and bring them up to date. Unfortunately, as expats, we are easy prey!

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Re: UK Retirees to face cuts in Pensions

Post by caller » Sun Jun 17, 2018 9:22 pm

I think the first thing they will do will be to look at the average value of any overpayment and then consider that against the cost of seeking to recover the money from x individuals They will also consider the moral of seeking to recover from those who are not to blame for the error, which for most will be quite small, plus I would imagine quite a few of those overpaid would be deceased as well.

When you consider the example they have shown, in respect of Mr. Smith, who clearly held a very senior position and would be at the higher end of those receiving a pension and yet his overpayment was only 1.8k, it kind of suggests most overpayments would be relatively small, the overall total may be a large figure, but if you have to collect small amounts from many people, that costs.
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Re: UK Retirees to face cuts in Pensions

Post by StevePIraq » Mon Jun 18, 2018 10:08 am

Strange I can open the article and other on Financial times and I do not subscribe. If you search Mr. Google for "UK Retirees to face cuts in Pensions" you will find lots of articles on the subject.

In one article a government spokesperson states they will not be seeking to recover over payments but will be reducing future payments to those people. There was also a statement that there was an equal number of underpayments but no statement as to whether they would be made up
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Re: UK Retirees to face cuts in Pensions

Post by arcadianagain » Mon Jun 18, 2018 4:29 pm

Like many ex-pats my pension was frozen when I left the UK. I found out that if I returned to the UK for a holiday my pension would be upgraded to the current level for the duration of my stay. The telephone number to register is 0191 218 7777. This I did, gave my details, NI number and dates in the UK. And guess what? I checked my bank account this morning, the first pay day after my return, and lo! there it was, an extra payment.

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Re: UK Retirees to face cuts in Pensions

Post by uncle tom » Tue Jun 19, 2018 6:14 pm

Why does anyone entitled to a state pension ever admit to leaving the UK?

Not hard to find an address to have mail sent to, and the powers-that-be have very little idea where people are..
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Re: UK Retirees to face cuts in Pensions

Post by Dannie Boy » Tue Jun 19, 2018 6:33 pm

uncle tom wrote:
Tue Jun 19, 2018 6:14 pm
Why does anyone entitled to a state pension ever admit to leaving the UK?

Not hard to find an address to have mail sent to, and the powers-that-be have very little idea where people are..
If only it were that simple - nowadays there are so many things that you have to declare to various institutes that the likelihood is that you would get caught out and then face fines, a possible criminal record and no doubt, have to pay it back with interest.

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Re: UK Retirees to face cuts in Pensions

Post by uncle tom » Tue Jun 19, 2018 6:51 pm

nowadays there are so many things that you have to declare to various institutes
Such as?

It's hard to identify occasions when you would need to physically present yourself, aside from jury service - but even then they will cancel a jury summons now for the slightest reason - the court service doesn't want reluctant jurors!

If you Google the question, it's actually quite hard to find what degree of absence legally constitutes emigration, if the person concerned doesn't actually acknowledge the fact. It's almost as though you remain UK resident for as long as you style yourself as such, even if it's in spirit only!
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Re: UK Retirees to face cuts in Pensions

Post by HHTel » Tue Jun 19, 2018 6:55 pm

A member of this forum (sadly now deceased) moved here without telling the authorities in the UK (DWP for example). It was later discovered that he lived in Thailand and was forced to pay back the overpayments. I think when he died his pension was cut by 50 quid a month.
In my case, I wanted to move some quite hefty pensions out of the UK into a QROPS (no longer an option) which required filling in forms from HMRC and DWP.
It's much more difficult to 'hide' these days.

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Re: UK Retirees to face cuts in Pensions

Post by uncle tom » Tue Jun 19, 2018 7:20 pm

A member of this forum (sadly now deceased) moved here without telling the authorities in the UK (DWP for example). It was later discovered that he lived in Thailand and was forced to pay back the overpayments. I think when he died his pension was cut by 50 quid a month.
I have a good idea who you're talking about. There's another expat (still living) whose UK accountant carelessly dropped him in it by telling the revenue that his client was permanently resident in Thailand.

However, if you don't acknowledge that you are living permanently in Thailand - which is not dishonest, because what is 'permanent' and events might make you wish to return.. - and if asked directly, state that you are currently enjoying an extended holiday, again being careful with words, but not dishonest.

If you keep your principal bank account in the UK, have a UK mailing address and also make the occasional trip back to renew your passport, for example; and also don't attempt to make yourself UK tax exempt. If you are careful not to plaster your luxury home, Thai wife and second family all over social media.

- It's hard to see how they could 'prove' that you had become permanently resident..
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Re: UK Retirees to face cuts in Pensions

Post by HHTel » Tue Jun 19, 2018 9:03 pm

There are times when you will receive a form that must be filled in confirming you are alive and proof of residence (i.e. utility bills etc). When I've received these, I have no option than to use immigration and have the copy certified. Although I have a bank account and 'address', I would have no way of proving I live in the UK. I'm not on any utility bills, not any electoral roll etc.
You can get away with it for a while getting the annual increases and 'cold weather allowance', but eventually you will be found out. As far as the UK authorities are concerned, I moved here on such a date (although I'd been here a few years). My pension was frozen at that point. If I hadn't done that, I'm sure I would have been found out eventually and been in a lot of trouble.

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