Time to credit pension account

[Peterpetrole]

Because of me increasing contributions I've been watching my pension account closer and noted that my previous months pay (28thof the month) didn't get credited until about the 24th of the following month.

I queried with People's Pension and their reply was "ah yes, employer contributions are paid in arrears"

Does this sound right? Is my employer likely sitting on my money or is People's Pension obfuscating? Have other people noticed when their pension account gets credited?

[Gary29]

Matches my experience with my workplace scheme.

[Ultra Sound Guy]

Mine is anything up to 5 weeks late. I queried this with my employer who said that they always sent payment at the same time as our salary transfer (timed to arrive by last Friday of month).

[AllyM]

In my case salary lands on the last working day of month, pension account is credited on or around the19th day of the following month and they purchase my chosen fund on or around the 24th day.

Nothing unusual about that and it’s consistent month to month.

[Peterpetrole]

Ok cheers, maybe I've uncovered the next pension scandal.

[TheK1981]

I queried this at my place, we recently moved from one provider to another and they are both the same, they must be sat on huge amounts of cash before it is allocated to our pensions and then invested

[OddCat]

An employer generally has until the 19th day of the following month to pay pension contributions across to the pension provider if paying by cheque, or by the 22nd day if paying electronically. The deadline is the "19th" if the payment method is by cheque, as per UK regulations. These contributions are legally required to be paid by this date and must be received by your pension provider by then

It'll be your employer having set the contribution collection date as such.....

[onetwothreefour]

I think it is definitely a con, but it's not clear to me whether the delay lies with the employer (I suspect so) or the pension company. I had a case where they accidentally double-paid a month's pension, but the delays were so high that this hit my pension after the pay date for my next pay run, so I asked if they couldn't just leave it there. Surprise surprise, that was impossible, so they had to unwind one payment only to make it again weeks later...

[Countdown]

I'm not sure why it's a con or scandal.

Why would the Employer pay the money any sooner than they have to?

It may well be a significant component of their working capital so the sooner they make payment the more it's costing them in interest.

[Peterpetrole]

Countdown said:

I'm not sure why it's a con or scandal.

Why would the Employer pay the money any sooner than they have to?

It may well be a significant component of their working capital so the sooner they make payment the more it's costing them in interest.

Well as a minimum I'd expect an employer to explicitly explain that to employees, eg "you get paid your take home on the 28th but you don't get paid any pension contributions until the 21st of the following month"

[Rufus Stone]

Peterpetrole said:

Ok cheers, maybe I've uncovered the next pension scandal.

You haven't.

[lancslad58]

What's important is the unit price of the funds that the money is being invested in.

[Countdown]

Peterpetrole said:

Countdown said:

I'm not sure why it's a con or scandal.

Why would the Employer pay the money any sooner than they have to?

It may well be a significant component of their working capital so the sooner they make payment the more it's costing them in interest.

Well as a minimum I'd expect an employer to explicitly explain that to employees, eg "you get paid your take home on the 28th but you don't get paid any pension contributions until the 21st of the following month"

If they're that interested they can find out by looking at their pension account, or by asking the Employer.

I'm in charge of our various Company pension schemes and I'll be honest - it's never a question that has been asked. When questions DO get asked we tend to either update the membership Guide or add it to the pension FAQ on the intranet

[Peterpetrole]

Countdown said:

If they're that interested they can find out by looking at their pension account, or by asking the Employer.

I'm in charge of our various Company pension schemes and I'll be honest - it's never a question that has been asked. When questions DO get asked we tend to either update the membership Guide or add it to the pension FAQ on the intranet

That's the inertia though isn't it - as you can see from the other replies on this thread.

Right thinking hard working employees trust that when they get paid on the 28th that means their pension gets paid at the same time. Few people imagine that their money is benefitting someone else for 23 days.

[Tighnamara]

Peterpetrole said:

Countdown said:

If they're that interested they can find out by looking at their pension account, or by asking the Employer.

I'm in charge of our various Company pension schemes and I'll be honest - it's never a question that has been asked. When questions DO get asked we tend to either update the membership Guide or add it to the pension FAQ on the intranet

That's the inertia though isn't it - as you can see from the other replies on this thread.

Right thinking hard working employees trust that when they get paid on the 28th that means their pension gets paid at the same time. Few people imagine that their money is benefitting someone else for 23 days.

Just think though, investing a month later could be the perfect time based on market values or maybe not............

What is the issue for you, do you think you are losing money ?

[Peterpetrole]

Tighnamara said:

Just think though, investing a month later could be the perfect time based on market values or maybe not............

What is the issue for you, do you think you are losing money ?

Yes I'm losing money, at least 23 days interest. Every month. Even on a small £500 monthly contribution that would be £168 a year at 4% interest.

[Tighnamara]

Peterpetrole said:

Yes I'm losing money, at least 23 days interest. Every month. Even on a small £500 monthly contribution that would be £168 a year at 4% interest.

Not sure there is anything untoward or you have found a big failing with pensions.

You could elect to not be part of the company scheme and pay into your pension directly each month on pay day .................but there would be more downsides

1. Likely no company contribution
2. No NI benefit
3. Time for pension to reclaim your tax - 20% (20% not invested until claimed)
4. Time to claim additional 20% back if in 40% bracket


"For a workplace pension, the government guideline states your employer must usually pay your contributions to the pension scheme by the 22nd of the month following the pay period (or the 19th if they pay by cheque). Employers have a legal obligation to deduct contributions from your pay and pay them into your pension on time and at least the minimum amount. You can make contributions to a personal pension at any time, but your employer is responsible for the deadline for workplace pension contributions"

[lancslad58]

Peterpetrole said:

Tighnamara said:

Just think though, investing a month later could be the perfect time based on market values or maybe not............

What is the issue for you, do you think you are losing money ?

Yes I'm losing money, at least 23 days interest. Every month. Even on a small £500 monthly contribution that would be £168 a year at 4% interest.

You do not lose interest, your contributions will purchase units in a fund. Fund goes up, your pension pot goes up, fund goes down you pension pot goes down.

[Peterpetrole]

lancslad58 said:

Peterpetrole said:

Tighnamara said:

Just think though, investing a month later could be the perfect time based on market values or maybe not............

What is the issue for you, do you think you are losing money ?

Yes I'm losing money, at least 23 days interest. Every month. Even on a small £500 monthly contribution that would be £168 a year at 4% interest.

You do not lose interest, your contributions will purchase units in a fund. Fund goes up, your pension pot goes up, fund goes down you pension pot goes down.

Yes I realise that, I was using a stable interest rate as a minimum example of the value of money lost. If an average pension return is 5% then the amount lost each year is £210.

20 million full time employed workers UK equals 4.2 billion every year. Shocking really.

(Rachel Reeves wanting more pension fund investment in UK companies, well there's 4.2 billion for nothing).

[lancslad58]

Peterpetrole said:

lancslad58 said:

Peterpetrole said:

Tighnamara said:

Just think though, investing a month later could be the perfect time based on market values or maybe not............

What is the issue for you, do you think you are losing money ?

Yes I'm losing money, at least 23 days interest. Every month. Even on a small £500 monthly contribution that would be £168 a year at 4% interest.

You do not lose interest, your contributions will purchase units in a fund. Fund goes up, your pension pot goes up, fund goes down you pension pot goes down.

Yes I realise that, I was using a stable interest rate as a minimum example of the value of money lost. If an average pension return is 5% then the amount lost each year is £210.

20 million full time employed workers UK equals 4.2 billion every year. Shocking really.

(Rachel Reeves wanting more pension fund investment in UK companies, well there's 4.2 billion for nothing).

I'm out of this thread......