My company has made prsa wage deductions for an Employee: Pen Co did not activate DD!

[David_Dublin]

Hi. I run a small company.

One of our workers set up a scheme a few years back under our PRSA scheme.

It turns out that since then his paychecks are being deducted the right amount but the Pension Company never activated the pension, and no DD has been executed.

We use a local company here in Tralee to look after our pension stuff. They are blaming the Pension company for not setting it up right.

That's certainly one of the issues I would have. Another is that the Pension Company did not realise - the pension company send me statements every year, but this employee never got any statements.

It has only come to light now since he requested a change in address thru the broker. I'd also have expected this to turn up in the annual audited accounts - the same people that do our payroll do our accounts.

I wonder if anyone can advise what I should do now. I obviously need to ensure the employee is not out of pocket. But I'm not in a position to write a cheque for over 10k.

 

[Complainer]

What do you mean by DD? If this refers to direct debit, I can't see why this would be required, if the money is being deducted from salary.

A good principle in all cases like this is to follow the money - if it was deducted from his paycheck, where did the money go to?

 

[David_Dublin]

DD = Direct Debit.

It stayed in the Company bank account because Aviva never executed the Direct Debit, so they never got the money.

 

[Complainer]

OK, so you have (or had) the money. It does seem very strange that your accountants did not notice this 10k in your accounts. Can you push the responsibility back onto them, and get them to liaise with the pension folk to sort it out?

BTW, the employee probably had a lucky escape by NOT having his money invested in the markets for the past few years.

 

[boaber]

This should be reported to The Pensions Board immediately. They take very seriously the issue of non-remittance / non-investment of employee contributions

 

[David_Dublin]

Boaber - well that kind of sounds like I'd be the one getting in trouble to be honest. Though I could maybe make an enquiry to see what options I might have, other than to write a cheque for 10k. Worst comes to worst that is something that I know I'll have to do, I definitely will not see the employee out of pocket.

 

[Complainer]

Maybe you could agree a solution over a few years, seeing as the error took place over a few years. So you make €10k or similar additional contributions
to his fund over the next few years.

 

[tenchi-fan]

Maybe you could agree a solution over a few years, seeing as the error took place over a few years. So you make €10k or similar additional contributions
to his fund over the next few years.

Nope, this is not an appropriate solution at all and could get the op into trouble with the revenue commissioners or pensions board.

The employer is obliged to remit all deductions within a certain number of days and provide the employee with written confirmation that the deductions have been paid into the prsa (usually as a line on the payslip)

Op, you should go to the broker who set up the policy and let him argue out some arrangement with the prsa provider.

Regarding your accountant, PRSA providers provide employers with a statement of contributions broken down by employee so I don't know how your accountants didn't perform the simple check of comparing the list of deductions from payroll against the list of contributions.

 

[ajapale]

Hi DD,

Ive expanded the title somewhat to more fully reflect your predicament.

Let me know if the new title is ok?

Im not a payroll accountant but would assume that any payroll co would reconcile deductions!

What payroll element (code) appears on the payslip for this decuction? What about other decuctions how are they accounted for?

aj

 

[David_Dublin]

Op, you should go to the broker who set up the policy and let him argue out some arrangement with the prsa provider.

Regarding your accountant, PRSA providers provide employers with a statement of contributions broken down by employee so I don't know how your accountants didn't perform the simple check of comparing the list of deductions from payroll against the list of contributions.

Agreed tenchi-fan, this is what I'm doing. I contacted the Pensions Board and Pensions Ombudsman. Both confirmed that the company will have to make up the payments subject to what the Pension providers suggest. They're working out what it would/should be currently worth. The ombusman will only become involved should I have an issue with how the Pension company decide to settle the matter.

I think the complication re the payroll was that this emplyee was the only one in the PRSA scheme, all other pension contributions were part of the Directors contributions. So they took the employee contribution to be the amount on the payroll, and assumed everything else was directors contribution. So the directors pension contributions have been understated for the last few years, so a provision will have to be made in next years accounts.

But I agree, I'm no accountant, but when I'm doing a bank rec or any type of rec, when see a figure that is an accumulation of several constituents, I like to understand what it is made up of. The more I think about it the more I think this really should have been picked up in the annual audit.

Thanks for changing the title, it's a little mor informatiive.

 

[tenchi-fan]

The more I think about it the more I think this really should have been picked up in the annual audit.

This isn't actually true. €10000 over a number of years probably will not be material. If I was looking at the total over pension contributions for all employees and it was out by a couple of thousand compared to documentation from the pension provider, I might put it down to a timing difference, a small accounting error not worth investigating, or even a rounding difference.

However if your auditor, accountant and payroll provider are one and the same you might ask them to be a bit more careful in future.

 

[David_Dublin]

This isn't actually true. €10000 over a number of years probably will not be material. If I was looking at the total over pension contributions for all employees and it was out by a couple of thousand compared to documentation from the pension provider, I might put it down to a timing difference, a small accounting error not worth investigating, or even a rounding difference.

However if your auditor, accountant and payroll provider are one and the same you might ask them to be a bit more careful in future.

Tenchifan - when you take into account that the auditor, accountant and payroll people are all the same, and that there are only 3 employees that make monthly pension contributions it is a bit of an f-up to be honest. It should have been caught. A breakdown of what the pension contribution consisted of was never requested, instead assumptions were made.