Don’t let the state ‘steal’ your savings

Are pensioners getting a raw deal from government? Ian Handford thinks so

Keep a check on your pension contributions

TWO injustices have arisen where the Government are failing pensioners. Having just approved proposals to “acquire dormant pensions” in support of charities and social enterprises is seen as a way of stimulating the economy. With tens of thousands of unpaid pension languishing in private and public sector suspense schemes, it seems its the time for action.

My first injustice involves State Pensions due to divorcees, wives and widows and the second, with the recent legislation concerning the “dormant pension” provisions.

The injustice involving thousands of wives, divorcees or widows who have been underpaid retirement pension for many years are women who prior to the 1990’s paid the Industrial Injuries (NI) Contribution on their earnings rather than the full N.I. contribution. Now in retirement they will likely be receiving just a few pence if not a small State Pension weekly, yet could be entitled to a higher pension by utilising a husband’s historic NIC record.

Contributions of a current or past husband automatically add to any shortfall of a woman’s state contribution record, thus entitling them to higher pension. The Chancellor’s last budget included £3 billion being set aside in the formal suspense fund while at the same the Department of Work and Pensions (DWP) were told to write to 5,000 women about this anomaly. The Department having hired 500 extra employees to “trawl underpayments” which may apply where a women is receiving only a small State Pension. Letters received from the Department must NOT be ignored as it is unlikely they will be followed up.

This anomaly arose after the old reduced rate of NIC (Industrial Injuries Contribution) was merged with the State Graduated Pension

Scheme (GPS) in 1975. At the time women’s retirement age was 60 but then GPS was abolished and when the retirement age went up to 65 (following a High Court decision to align men and women’s retirement age) many female pensions were compromised. Years later Pensions Minister Steve Webb (today Sir Steve Webb) admitted there had been significant problems at the Department which came to light after he left the department and became a Director of Royal London Insurance Group. His successor at the Department, Minister Guy Opporman later wrote to Steve inm correspondence released to the press confirming that over the years the DWP had replied to 12 million enquiries on state pension, although 3% of answers given were incorrect. The result 360,000 people were advised their pension (on average) was £1,500 underpaid. To his credit Steve commented at the time “as a former Minister I am sure

you will recognise that HMRC records can never be perfect – there will always be a residual level of error in our system. Trying to guarantee information about pensions due in the future is always tricky, as the rules on NI contributions paid and pension rates and allowances are forever changing”.

My second injustice deals with Private Sector pensions. Government will shortly pass a law allowing all “dormant pension assets” to be siezed as a way of stimulating the British economy. This concept to “steal” private personal pension monies held in suspense at pension companies (the Provider) is to me dreadful. The pension has been earned through individual premiums which are merely unclaimed, mislaid or lost and have been earning added pension for years.

Pension providers in law must retain all unclaimed or unpaid pension in a suspense account whether trading on or not. If a Provider disappears or as an ex-employee or director you mislaid or lost documents or maybe have changed your name, (via marriage etc) the premiums paid are still valid. If a provider becomes insolvent or changes its business name or merges with a rival provider etc all pensions earned continue to accrue added valid pension until it is claimed.

Independent researcher the Pensions Policy Institute estimate that in 2018 there were 1.6 million dormant pensions valued at £20 billion. Yet asset tracing firm Duncan Stevens of Gretel more recently stated the suspense figure is more like £40 billion of unpaid pension awaiting claim. It also stated that during “lockdowns” people with more time on their hands, had created a surge in the number of enquiries being made about their forgotten, yet valid policies.

WMN features of mine have for years highlighted unidentified or unpaid State and Private pension in suspense, particularly concerning earnings of part-time, seasonal, weekend, subcontractor or those having two or more employers. Currently, HM Treasury (NIC) Suspense Fund holds literally £billions of pension monies, increasing by £2billion annually.

Identifying your personal NIC contributions is paramount although it is clear to me, few individuals follow up these features in spite of the fact they can be entitled to more pension which once identified is payable for life and will be backdated.

■ Ian L Handford is a political activist and present Chairman of Torbay Civic Society and former Chairman of the Federation of Small Businesses

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