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

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Damday

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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
 
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...
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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.
 
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.
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If they weren't in writing, it will be difficult argue that case.
 
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.
 
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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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.
 
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.
 
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.
 
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
 
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.
 
Are they trying to reclaim it completely, or allowing you to keep it as long as it's left in the current plan?
 
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.
 
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.
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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.
 
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.
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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.
 
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.

.
 
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.

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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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
 
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.
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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.
 
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.
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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.
 
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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