arrears in notional service

M

mumof4

Guest
Hello all
I was looking for a bit of advise - I got a call today from our HR head of department - local authority - who informed me that due to an 'error' my payment contributions toward my notional service buy back of almost 9 years - I have been contributing since Aug 2001 - has not increased with my payrise/increments and therefore I have arrears - the value was not given but will be fowarded in a letter to me later this week -
I first got a letter of offer from my HR section in 2001 stating the repayment figure spread over the next 31 years - the buy back was to bring me up to 40 years service - I was also given an one-off payment option at the time but opted for the fortnightly repayment figure - I still have this letter and this is what my payments has been based on for the last 8 years -
where do I stand ? is the error not a HR problem? do I have to pay back?
 
You do have to pay back. While it's a payroll error, the fact is that they undercharged you. It unfortunately underlines the importance of ensuring that you check your payslip and make sure you understand fully all of the deductions and the basis on which they are made.

The fortnightly deduction will probably - indeed, should - have been expressed to you in two ways: firstly, that it is a percentage deduction which is linked to salary, and secondly what that actual amount was at the time. If they did not inform you that it was a percentage deduction they should have done, but I do not believe you would have any recourse against them since the terms and conditions are set out in a number of circulars.

As the arrears may now be moderately substantial, it would be reasonable for your employer to offer you the option of going immediately to the correct deduction level and making an agreed payment plan for the arrears if you are not willing / able to pay them at present.
 
Thank you for your reply Dreamerb, I do realise that payback will have to be made and no doubt they will be reasonable by offering an agreed payment plan - I was informed that it was a presentage deduction but not that it was linked to salary- perhaps this was an oversight by HR but non the less the offer paperwork do not state this and perhaps that is why the 'error' has arisen- on the offer paperwork they also offered me a 'one off' payment - is this somehting that can still be offered under legislation and if so would I be - financially/tax wise- better off going for that now rather the fortnightly contributions - also as I worked in the private sector for 15 years previous to this employment and am currently paying an A1 stamp is it to my advantage to continue to buy back the years or will I be taxed to the hilt when I hit 65 and still only get the PS pension plus make up by SW or what ? any advise or information would be great as I am really confused now and until I receive my letter re the arrears ammount my head is just full of pensions etc

thank in advance
 
Honestly, I think you'd be best taking the full set of questions to a financial advisor! A couple of hours preparation and a couple of hours of advice will be well worth the trouble.

Write out things like:
Any pension scheme from your previous employer(s)
Projected years' service in your local authority by age 65
Cost of buying back years (as a % of salary!)
Current salary
Estimated total pensions
Savings / mortgages / and major medium to long term financial plans.

Also, ask your HR people if you can still exercise the one-off option and what it will cost [it will cost more now, since you're on a higher salary and I'm really not sure what the terms are].

Seriously, there are a few people on the site who are extremely well informed on pensions and the like (I'm not one of them!), but you won't get good tailored advice for your circumstances without giving a lot of personal information... and striking lucky on who answers.
 
mumof4 should be aware of a couple of things:
1) make sure you informed HR of all your previous service when you applied for NSP - otherwise you may not be entitled to as many years notional purchase. I'm a little concerned that your NSP will bring you up to a full public service pension but you may have some other pension entitlements from your private sector 15 years (not clear from your post).

2) NSP by regular contribution is always on a %age of ongoing salary - in my experience you would not expect to see reference in the offer document to any increases...firstly, the employer is not guaranteeing any salary increase and, secondly, it's assumed that you'll guess it will be increased.

3) arrears will usually be collected in such amounts that the cash sum of the arrears deducted in any wage period is no bigger than the normal ongoing deduction i.e. you should expect to pay no more than twice your usual NSP deduction until the arrears are paid.

4) there could be no advantage to you in making a lump-sum payment of the arrears.
 
thank you both for your prompt reply's
Dreamerb - I am going to get my letter re arrears today or tomorrow and will know more where I stand then and indeed may have to talk to a financial adviser - when I try to work out figures etc I get a bit confused -thanks
Oysterman - thank you for your comments/point
1) all my previous private sector employment was in small local firms but no pension contributions were ever made
2) at the age of 65 I will have worked 31.173169 years public service done - I am buying back 8.8268 years to make up the full service
3) the lump sum payment I was considering was the lump sum contribution that I was initally offered instead of the periodic contributions - I do not know if this type of payment is still allowed?
4)I started my buy back in 2001 as as previously noted by Brendan in his post of 06.08.2007 re Should I buy years or contribute to AVC/PRSA? question at the top of this thread what rate would should I be calculated at?
Once again any help or replies are very welcome
 
Should you opt for NSP or PRSA/AVC?
On this site the consensus favours NSP. Furthermore, the rates will have risen since you started purchase in '01 so you're getting a better deal if you stick with the original contract by periodic salary deduction.

Do remember that buying NS up to full 40 years service doesn't preclude you from also taking out a PRSA - there are a number of threads here on that topic.
 
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