Unexpected Pension Contribution

[AWOL]

Please help me. After leaving it undisturbed for a while I transferred all of a former employer's pension to a SIPP. The transfer completed some time ago. I have received a letter today saying that an additional amount of money that looks suspiciously like a months pension contributions has now been transferred to my SIPP from my old company money purchase pension scheme and it looks like they contributed to the pension this month. I left a couple of years ago.

Luckily it isn't enough to take me over the annual allowance (I have no earned income). I assume this counts towards my annual allowance. What happens now?

It's not like it's in a bank account and can be accessed but I am suspicious given that it is a long time since I left the company and the only other explanation is that they suddenly realized they missed a months payment but it seams very late for sorting that out.

I have no idea of the legal nor the practical implications of this situation and am very worried by it. Please help me work out what to do. I really could have done without this. I am too young to access my pensions and even when I am the timing of accessing my pensions will be driven by my own financial plans. Can they just take the money back?

Thanks.

AWOL

[swill453]

I'd tend to look at it in simple terms - the transfer was requested, and it took place. It's just that it happened in two chunks. There's no evidence that anything other than that was involved.

I'd accept the situation and move on.

Scott.

[AWOL]

I was able to log in to my old pension and see that I received a payment from my former employer two days before the transfer that is equal to previous employer contributions. If this was a month or two after leaving I may have thought it was a missing final payment. However after all this time it looks like a payroll (or whatever system sends money to pensions) error.

I think that I need to contact my former employers HR department and ask them for an explanation. It's the only way I will be comfortable with the situation. Thank you for the advice.

[AWOL]

In your situation, I would ask the company. I don't think anyone else can give you an answer about why that money landed in your SIPP.

My own experience was one of having a months salary paid into my bank account from a company I had previously left. The company told me to keep the money as it wasn't worth their time trying to reverse the payment, the income tax, the NICs and so on.

It might be that you are told to keep the money.

RVF

When working for another company in the 90s I once received a five figure over-payment of my salary and contacted my then employer and we arranged for me to pay it back and I'd expect to do the same for this four figure sum however I think the fact this is in a pension wrapper and has subsequently been transferred makes things more complex however the truth is I don't understand what mechanisms are available for correcting this situation and how accepting HMRC will be. In bed last night I decided that, like you suggest, there is no way to avoid contacting them although it would otherwise be the last thing on Earth that I would wish to do. Thank you.

[AWOL]

I do know where a mistake has been made by individuals, for example, exceeding the annual contribution limit, the excess payment has been unwound and any tax claimed by the SIPP administrator repaid to the revenue. I don't think there is anything here that hasn't happened before. I think you should take comfort from that thought and contact the company HR.

RVF

That is reassuring. As much as I'd love this to be money owed to me I strongly suspect I have no right to it and I just want things unravelled with no impact on my allowances and no nagging doubts left to pester me. It would of course be lovely if they decided I could keep it but I think that is unlikely.

[AWOL]

Well here's a surprise. It turns out it took my employer almost 2 years to make my last pension contribution. So here's the question does this use up £1400 of this years annual allowance? I think I may call the Inland Revenue and check.

[AWOL]

I checked with a very gruff man at the HMRC who was clear that it's the year that the payment is received that counts for allowance purposes not when it ought to have been received. I think he thought I was an idiot for asking. He was most insistent that I inform my SIPP of the contribution rather than just changing my contributions to stay within the limits. I'm not sure why as I never informed them of how much I was contributing to my employers scheme when I was working.

My "earned income" is slightly below the minimum annual allowance of £3600 so I need to adjust my £240 a month SIPP contribution. I'll probably just do a lump sum for the outstanding amount.

However as you suggest I am disproportionately joyous about this modest improvement in my wealth.