Pension fraud/scamming
Discussion
Is there any pension/legal bods on here able to answer a question on pensions?
I'm in a final salary pension at work, we have recently been told that they plan to freeze the current pot we have built up and we either start paying more to keep roughly the same amounts at the end (but the extra amount you would need to pay isn't worth it at the end as you could get a better return just using the money toward your mortgage or some other saving/investment) or your final figures will be lower.
Now the reasons we are being told for this is a shortfall in the projected pension fund and people living longer (this bit gets me angry as my dad died not long after retiring)
But what we have found out is that management have been abusing the final salary bit by putting themselves on daft shifts to qualify for big shift premiums that they would normally never work.
So instead of getting maybe 12% shift pay they now qualify for 38% and then get an inflated lump sum and final salary pension.
Is this not some sort of fraud?
They get better pensions and we are funding it, but our pensions will be lower and they don't lose anything.
I'm in a final salary pension at work, we have recently been told that they plan to freeze the current pot we have built up and we either start paying more to keep roughly the same amounts at the end (but the extra amount you would need to pay isn't worth it at the end as you could get a better return just using the money toward your mortgage or some other saving/investment) or your final figures will be lower.
Now the reasons we are being told for this is a shortfall in the projected pension fund and people living longer (this bit gets me angry as my dad died not long after retiring)
But what we have found out is that management have been abusing the final salary bit by putting themselves on daft shifts to qualify for big shift premiums that they would normally never work.
So instead of getting maybe 12% shift pay they now qualify for 38% and then get an inflated lump sum and final salary pension.
Is this not some sort of fraud?
They get better pensions and we are funding it, but our pensions will be lower and they don't lose anything.
The Leaper said:
Surely, as the rules of the scheme provide that shift pay is pensionable, there's nothing illegal in what's been going on.
R.
So it's not strange and a bit iffy that they normally work 2 Shifts 12% but because they are able to put themselves on a higher percentage shift for 3 or 4 months within their last 5 years so to inflate their pot? R.
When there is no reason to be on those shifts bar them saying so.
edc said:
How do you feel about executives or directors on six or seven figure salaries getting higher percentage pay awards than the main employee population? That's another slug of money you are funding to their pensions too?
I've got no problem with that as that is their salary. The bit where they can put themselves on a shift they don't normally work for 3 or 4 months to then claim a bigger pot is the bit people have a problem with (as this is one of the reasons the trustees are changing the set up of the pensions) Changing the rules after its caused a shortfall, so that people can't do this anymore but not chasing the ones who have done it already.
By "claiming a bigger pot" I assume you mean that by working and getting paid for extra shifts their pensionable salary increases, and so does their pension by application of the typical final salary scheme formula. In a final salary scheme there is no such thing as personal pension pot (other than by a member paying AVCs).
If the rules include shift related pay and they work the shift, I fail to see why anything needs to be done as they are entitled to the pension based on the shift work completed.
R.
If the rules include shift related pay and they work the shift, I fail to see why anything needs to be done as they are entitled to the pension based on the shift work completed.
R.
I used to work for a very large retailer, turnover in the billions. We had a 40/60ths final salary pension scheme based on your final years salary.
When their main board directors were due for retirement they would increase their final years salary by 50% ish so that when they retired their pension was equal to their normal salary in the previous year prior to retirement.
When their main board directors were due for retirement they would increase their final years salary by 50% ish so that when they retired their pension was equal to their normal salary in the previous year prior to retirement.
edc said:
3 or 4 months of extra shift pay in the last year won't make much of a difference for a person's final salary pension.
It's not 3 or 4 months of extra shift pay, the final salary will be worked out on the highest pay from the last 5 years. So they are in effect getting a 20+% pay increase when their pension is worked out. So? If that's what the rules say, where's the problem? Unusual if the rules actually do say that final pensionable salary is the single highest annual salary in the past 5 years. I'd expect there to be some averaging of annual salaries to get to final pensionable salary in the definition in the rules.
R.
R.
ade73 said:
edc said:
3 or 4 months of extra shift pay in the last year won't make much of a difference for a person's final salary pension.
It's not 3 or 4 months of extra shift pay, the final salary will be worked out on the highest pay from the last 5 years. So they are in effect getting a 20+% pay increase when their pension is worked out. You will probably be aghast at some of the other types of practice that happen such as people retiring after 55 when their earnings calculation will be at it's peak but returning to the business on the same or lower salary or allowing them to work part-time (but not affecting their pension now).
edc said:
Every scheme differs but I have a good handle generally on what basis schemes use. And I'll stick to that 3 or 4 months of an extra bit of shift allowance in the final year of work won't significantly affect the pension payment. For your calculation purposes they are getting a 20% increase for 3 months out of the 60 month calculation period.
Our scheme goes on your best pay over the last 5 years, by going on the different shifts for 3-4 months this sets your pay at that level for the year as we get protected shift premium. So they are getting an inflated final salary as the extra 20% is taken for the whole year. So 3 or 4 months sly shifts counts for the whole of the past 5 years. The question was on the legality of this.
if it works both ways ... I am sure you wouldn’t say no if it was offered.ade73 said:
Our scheme goes on your best pay over the last 5 years, by going on the different shifts for 3-4 months this sets your pay at that level for the year as we get protected shift premium. So they are getting an inflated final salary as the extra 20% is taken for the whole year. So 3 or 4 months sly shifts counts for the whole of the past 5 years.
The question was on the legality of this.
If you think its a scam or illegal speak to the Pensions Advisory Service. You can google them on-line for a free phone number.The question was on the legality of this.
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