# Ex employer refusing to release their pension contribution after I finished fixed term contract. Next step?



## Damday (9 Dec 2020)

I'm having an issue with my ex employer who is refusing to release the contribution they paid into the pension scheme I was enrolled in, as they claim only employees who've worked there for 2 years can keep the company's contribution.

Some background. I accepted a 15 month fixed term contract in 2019, during the recruitment process the HR member who offered me the job told me part of the package included a 7.5% pension contribution from the company once I passed the 6 month probation period.

They even confirmed this in the email offering me the job, they specifically mentioned "Pension: 7.5% company contribution upon successful completion of probation period"

I received the contract a week later. Under pension, it stated I was eligible to join the pension scheme and receive the 7.5% company contribution upon passing probation and to contact HR for further details. At this stage, throughout the recruitment process, the offer of acceptance, the email and contract there is no reference to needing to stay 2 years to keep the company's contribution. Happy enough I signed the contract and started the job.

After passing probation I join the pension scheme and received 9 months of the company's contributions into my pension.

At the 6 month mark, I received the documentation to enroll in their pension scheme. In a separate T&C document it does specifically mention employees needing to stay 2 years to keep the companys contribution.

Unfortunately, I don't have this in writing but I queried this with a member of HR staff at the time and they confirmed I'd keep the company's contribution when my 15 month fixed term contract ends.

I finished the fixed term contract during the summer but the company are now refusing to release their contributions claiming I'm not eligible to keep them as I didn't work there for 2 years. They claim I was misinformed by HR even though the email offering me the job specifically mentions it as part of my package.

I queried with them why would they specifically offer this to me on an a 15 fixed term contract when it's not possible to achieve 2 years service. If that's the case I was misled when they offered me the job. In my opinion, they've retrospectively changed the terms of my employment, if I'd known this at the time I would have negotiated a higher salary or taken another job.

I'm wondering what my next step should be as it's a considerable amount of money, approximately 5k.

I've a copy of the job offer email where it says "Pension: 7.5% company contribution upon successful completion of probation period" so I feel like I've a really good case to retain their contributions.

My ex employer has been extremely unhelpful and doesn't seem willing to engage in conversation. Should my next step be to contact a solicitor?

Thanks


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## MrEarl (9 Dec 2020)

Damday said:


> ...  I queried with them why would they specifically offer this to me on an a 15 fixed term contract when it's not possible to achieve 2 years service...



That's a particularly good question and raises an interesting point, from a legal perspective. Perhaps one of our legal eagles here, can assist with an answer.

A lot of company pension schemes have a rule, with regards to people who leave the scheme within 2 years, not being permitted to retain the employers contributions. I think its very unjust, but they seem to get away with it.

However, I see your scenario as different, given the fact that you were recruited for less than a 2-year fixed term, but your remuneration included the pension contributions. That seems fundamentally wrong, if they didn't intend for you to be able to retain the employer contributions.


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## Leo (9 Dec 2020)

It's common practice that if you leave within X years, you forfeit the company contribution. Employers use it as an incentive to stay. Did you get or request pension scheme details when you joined? Where I currently work, no one on a fixed term contract is entitled to company pension contributions and I believe more firms are moving that way to ensure fixed term staff don't claim to be permanent.



Damday said:


> In my opinion, they've retrospectively changed the terms of my employment, if I'd known this at the time I would have negotiated a higher salary or taken another job.



If they weren't in writing, it will be difficult argue that case.


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## ginslia (9 Dec 2020)

This seems to be a general Revenue rule for all pensions, though I couldn't find the reference on their site, but other websites do mention it (pensions authority, irish life among others).   

Logic is something like: When employer contributions are made to an approved pension scheme, they are ignored for income tax purposes and also for the individual tax free contribution limits - as long as the money stays within that arrangement.  After 2 years service, you can choose to keep it there as a deferred pension, but before 2 years you cant.


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## Damday (9 Dec 2020)

Hi All

Thanks for your input.

I have it writing in the job offer email where they said "Pension: 7.5% company contribution upon successful completion of probation period" but there was no mention of needing to be employed for two years, it was a 15 month fixed term contract.

I've worked in previous jobs, both fixed term and permanent, for less than two years and I've been able to transfer the employers contribution to my next employers pension. The issue here isn't that they're refusing to transfer it before the two year mark, rather they're saying I'm not entitled to keep their 7.5% contributions at all as I was employed for less than two years but I accepted the job on the basis of the employers 7.5% contribution. I'd no reason to believe I wouldn't be able to keep this at the end of the fixed term contract, as why offer it as part of my compensation and pay it for 9 months on a fixed term contract if I could never keep it. It was a maternity contract so there was never the remote possibility of staying on past 15 months either.


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## Sue Ellen (9 Dec 2020)

Would WRC or Pensions Board be able to offer advice?  May be worth a call and sure if they can't advise they might be able to let you know who could.


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## Alkers86 (9 Dec 2020)

Do you have another pension from a previous job? As far as I'm aware, if you transfer your previous pension into the new pension, you can get around this requirement. This may not be of use to you if you've left the job already. IF you're planning to leave I would do so before leaving.


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## cremeegg (9 Dec 2020)

While I am no expert I think there is a certain level of misunderstanding here. 

It is a requirement of Pensions Law that an employers contributions to a pension scheme become vested after 2 years employment, (it is not a Revenue matter). If an employee leaves within 2 years there is no legal obligation on the employer to let the employee keep the employers pension contributions.

Your job offer was on the basis, of "Pension: 7.5% company contribution upon successful completion of probation period". The company seems to have made the contributions, but given that you left within 2 years the company it is within its rights to take them back. This may seem misleading, but it is standard practice and certainly not illegal. 

How could you have secured the pension when the job was for a fixed term of 15 months. Obviously you could not.

You seem to have misunderstood the situation when you took the job, as the situation regarding the two years is standard practice (although many employers do allow their contributions to vest in a shorter period)  it might be argued that you should have known that the employers contributions would be taken back.

Equally it might be argued that the employer mislead you, either deliberately or carelessly. While the circumstances may have suggested that the employer contributions would vest immediately, the bare text you have quoted does not say or even suggest that.


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## deanpark (9 Dec 2020)

Fairly sure you won't get to keep employer contribution. Worth chancing it as you seem to be but I don't think they can be held under < 2 year service rule vis a vis pension rights.


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## Steven Barrett (9 Dec 2020)

Revenue rules are you have to be in a pension scheme for 2 years to be entitled to the value of their contributions. You cannot get this as a refund. It has to stay in the pension. 

You can get a refund of the value of your own pension contributions less tax at 20%. If you become entitled to the value of theirs, you can't take a refund of yours anymore. 

HR will use an employment contract template for all contracts and twig the salary etc. The wording in the contract is the same as I have seen in loads of contracts and pension booklets over the years. The 2 year vesting rarely appears in them. 

I would say you are very unlikely to get the employer's contribution based on someone not adjusting a copy and paste contract. 


Steven
www.bluewaterfp.ie


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## Damday (9 Dec 2020)

Thanks everyone for all your replies. 

I just need to clarify, I'm aware there is a two year rule/revenue restriction about being able to cash out the pension. 

I've worked contracts before where I left with the employers contributions before two years and transferred it into my next employers pension. 

In this case, my ex employer is unwilling to release the 9 months contributions they made after I passed probation. The pension provider said if the employer was willing to release the funds they'd adjust my options pack to include both mine and their contributions. So this is purely to do with the employer saying no.


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## Seagull (9 Dec 2020)

Are they trying to reclaim it completely, or allowing you to keep it as long as it's left in the current plan?


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## Damday (9 Dec 2020)

They've reclaimed the 9 months of employers contributions they paid into to my pension.

So my end of employment pension options pack only includes what I personally paid into the pension scheme during my time at the company.


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## Coldwarrior (9 Dec 2020)

Damday said:


> They've reclaimed the 9 months of employers contributions they paid into to my pension.
> 
> So my end of employment pension options pack only includes what I personally paid into the pension scheme during my time at the company.


Did you transfer a  previous  occupational pension into this one before your contract ended? I believe if you did and the total length of the combined pensions was more than 2 years then you can avoid the 2 year minimum required to keep the employers contribution.


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## Coldwarrior (9 Dec 2020)

SBarrett said:


> HR will use an employment contract template for all contracts and twig the salary etc. The wording in the contract is the same as I have seen in loads of contracts and pension booklets over the years. The 2 year vesting rarely appears in them.


Another thing that often doesn't appear in these contracts is that you sometimes can't join the company pension plan for 3 or 6 months, and won't get employer contributions for that time. I got stung with this when I last moved jobs and it still annoys me.


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## MrEarl (9 Dec 2020)

Hello,

Are we not drifting away from the key issue here?

This was a specific, fixed term contract, for a period of under 2 years. The employer knew this engagement was for less than 2 years, and yet, contracted to make pension contributions, for the benefit of the employee.

.


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## Steven Barrett (10 Dec 2020)

Damday said:


> Thanks everyone for all your replies.
> 
> I just need to clarify, I'm aware there is a two year rule/revenue restriction about being able to cash out the pension.
> 
> ...



The trustees are able to waive the 2 year rule if they want to. It is clear that this is not one of those situations. 


Steven
www.bluewater.ie


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## Leo (10 Dec 2020)

MrEarl said:


> This was a specific, fixed term contract, for a period of under 2 years. The employer knew this engagement was for less than 2 years, and yet, contracted to make pension contributions, for the benefit of the employee.



Companies often renew fixed-term contracts, so perhaps that employer contribution element does apply to others working there. Once a fixed term contractor is working more than 20 hours per week, they can't be excluded from joining a pension scheme, but as above, the employer is perfectly within their rights not to release their contribution. 

The offer via email is not a contract. Full terms should have been provided subsequently and any queries resolved and confirmed in writing to form the contract of employment.


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## Damday (10 Dec 2020)

Leo said:


> Companies often renew fixed-term contracts, so perhaps that employer contribution element does apply to others working there. Once a fixed term contractor is working more than 20 hours per week, they can't be excluded from joining a pension scheme, but as above, the employer is perfectly within their rights not to release their contribution.
> 
> The offer via email is not a contract. Full terms should have been provided subsequently and any queries resolved and confirmed in writing to form the contract of employment.



The contract, doesn't mention anything about a two year restriction, just that I'm eligible after passing probation and to contact HR for further details about the pension. 

I didn't see a need to as I wouldn't be eligible for a further 6 months. When I interviewed one of the selling points by HR for the fixed term contract was the pension contribution, and which they later put in writing in the job offer email. So I'd no reason to suspect it wouldn't be paid out at the end of the contract. 

Due to the nature of the role, there was never a possibility of the role being extended or moving to another role within the company to achieve two years service.


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## Alkers86 (10 Dec 2020)

Have you left the role already?
If not, you can transfer your previous pension to this fund to get around this two year rule (assuming you have at least two years service previously).
Otherwise, someone who changes roles frequently may never be able to accrue any employee contributions.


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## Itchy (10 Dec 2020)

> *Pensions information in employment contracts*
> An employer is obliged to provide an employee with a written statement of the terms of their employment within two months of their start date. This information can be incorporated into the contract of employment and should include any terms and conditions relating to pensions or the pension schemes that they must join as a result of their employment.
> 
> *Drafting pensions clauses*
> Pension terms and all pensions documents referred to in *the employment contract should be drafted with great care*. It is important to provide the employer with the flexibility and scope to change pension benefits in the future. It is equally* important to ensure that employees’ pension rights are precisely defined* and do not extend beyond what the employer intended. *Employees should not be afforded contractual rights to contributions or benefits outside what is intended by the employer or allowed for by the scheme*. The contract should refer to the pension arrangement chosen by the employer and the identity of the person(s) from whom further information on the arrangement can be obtained. The contract should also give the employer authority to deduct pension contributions directly from the employee’s salary and the power to change pension benefits or contributions in the future. This power will typically be set out in the pensions documentation itself but should be reiterated at every opportunity.











						Employment Update: Pensions and Employment Contracts – Tips for…
					

Correct drafting of the pensions clause in an employment contract sets out clearly what is being provided in terms of pensions in a clear and unambiguous way to the benefit of both the employer and the employee. Incorrect or poorly drafted pension clauses create confusion and frustration for an…




					www.mhc.ie
				




Its gamble. You have a case to say your employment contract is unconditional wrt pension contributions, backed up by communications from HR. Send a solicitors letter and see what the response is.


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## cremeegg (10 Dec 2020)

SBarrett said:


> The trustees are able to waive the 2 year rule if they want to. It is clear that this is not one of those situations.
> 
> 
> Steven
> www.bluewater.ie


This is the only relevant issue here. 

However if the company induced the OP to take the role on the basis that he would be able to keep the employer pension contribution then he has a case. 

It is clear the OP misunderstood, it is not clear wether this was because the company misled him, or because of his own mistaken assumption.


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## MrEarl (12 Dec 2020)

Leo said:


> Companies often renew fixed-term contracts, so perhaps that employer contribution element does apply to others working there. Once a fixed term contractor is working more than 20 hours per week, they can't be excluded from joining a pension scheme, but as above, the employer is perfectly within their rights not to release their contribution.
> 
> The offer via email is not a contract. Full terms should have been provided subsequently and any queries resolved and confirmed in writing to form the contract of employment.



Yes, I appreciate all of that Leo, but this company didn't just grant the employee access to the pension scheme, they make a contractual commitment to pay in contributions for the employee's, in the full knowledge that they were only contacting him / her for a 15mth term.


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## Seagull (14 Dec 2020)

I think it would be a fair assumption that you would be able to keep the pension if HR are pointing out the pension contribution knowing that it's a 15 month contract. If they specifically point it out as a selling point to get someone to sign, then they should be clearly explaining the vesting process.


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## Leo (15 Dec 2020)

MrEarl said:


> Yes, I appreciate all of that Leo, but this company didn't just grant the employee access to the pension scheme, they make a contractual commitment to pay in contributions for the employee's, in the full knowledge that they were only contacting him / her for a 15mth term.



I haven't seen the terms of the contract of pension scheme detailed here, so we can't assume that. Surely if the written contract stated beyond doubt that the OP would be entitled to all company contributions from day 1, this thread wouldn't even exist and they would have paid out.


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## Seagull (15 Dec 2020)

It sounds like either sharp practice or incompetence by hr.


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## Leo (15 Dec 2020)

Seagull said:


> It sounds like either sharp practice or incompetence by hr.



IT does, but we need to consider our only view is based on one party's interpretation of a conversation that took place over a year ago.


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## Steven Barrett (15 Dec 2020)

Seagull said:


> It sounds like either sharp practice or incompetence by hr.



It is quite usual for an employment contract to offer staff membership of the pension scheme without going through all the nuts and bolts of the scheme in the contract. That is why they ask for people to contact HR for details. There will also be something somewhere saying that membership is subject to the trust deeds and rules that will have the 2 year vesting rule in it.


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## Seagull (16 Dec 2020)

They don't need to go through all the details, but if they have someone they know is on a short contract and they're highlighting how great a benefit it is, then they should be mentioning the small detail that the company contribution only vests after 2 years, meaning that the employee will lose out unless they get a contract renewal. You probably only get to see the rules of the pension plan once you become eligible to join.


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## Leo (16 Dec 2020)

Seagull said:


> You probably only get to see the rules of the pension plan once you become eligible to join.



Another assumption we just can't confirm with the detail provided.


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## Damday (16 Dec 2020)

Leo said:


> Another assumption we just can't confirm with the detail provided.



The contract didn't mention anything about a minimum period of employment to retain the pension, just that I'm eligible for their contribution after passing probation and to contact HR for further details. I didn't see a need to request these documents before I signed the contract as HR told me I was eligible for their contribution verbally and via email. 6 months later upon passing probation HR emailed me said documents which had the term in it.

I ran it by a solicitor, he said it boils down to the contract which would cover the employer but felt a judge would side with me, due to them paying the contribution while it was never possible to achieve 2 years service and the email from HR specifically mentioning I qualify for their contribution after passing probation.

Only issue is it'd cost me more than the value of the pension to pursue it : (


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## Leo (17 Dec 2020)

Damday said:


> while it was never possible to achieve 2 years service



It's not uncommon for fixed term contractors to be renewed beyond two years, companies I've worked for regularly do that. Of course your former employer might be different, but they'd just need to show a few examples of them doing it to show contractors can and do retain the employer contribution.



Damday said:


> Only issue is it'd cost me more than the value of the pension to pursue it : (



If the solicitor thinks the contract covers the employer even with the contents of the email, then I'm afraid the employer is likely in a much stronger position than you on this one. If there was more doubt, a letter from your solicitor threatening action might encourage them to write a cheque to be done with this, but your solicitor is best positioned to advise whether that is worth the additional expense.


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## SGWidow (17 Dec 2020)

Damday,

Can you take the employer to the Financial Services & Pensions Ombudsman?

I'm not sure if you can?

I suspect that there is little point in taking the trustees to the Ombudsman as your grievance is with the employer.

Even if you can take the case to the Ombudsman, I'm not sure if it's worth the hassle (from experience of a family member there.)


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