Pension problem between employer and broker not setting up PRSA two years ago.

AlanMacI

AlanMacI

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I started a PRSA through my employer (with New Ireland, arranged through a local broker) two years ago and have being making weekly contributions via salary deductions ever since.

My total contributions over the two years are about 30k. Or at least I thought I was... I recently found out that due to miscommunications etc. between the broker & my employer no pension was ever constituted.

The money is still in an internal account in the company. I don't believe there was any dishonesty involved - just incompetence on both sides. I've been promised it will be sorted. However I'm scratching my head as to how. Is it possible to backdate 2 years worth of pension contributions? I'm contributing the maximum amount allowed according to my age. If the company hand me the 30k, then I'm immediately liable for the tax on it. I've also lost out on the growth of the fund - about 5k by my reckoning. Any ideas on a possible route to resolving this?
 
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You employer has broken the law by not remitting you pension contributions within 21 days. It is up to them to rectify the situation, the pension providers should be able to calculate the backdated contributions.

It is not a legal requirement to report it to the Pension Authority if it is not fraud, but they still want to know about any non payment of pensions for more than 3 months:
The Authority would be concerned to receive reports under section 83 where contributions have been outstanding for more than three months. The Authority has specified the format that the report should take so that all of the information required by the Authority to investigate the issue is submitted with the report.
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Towger said:
You employer has broken the law by not remitting you pension contributions within 21 days. It is up to them to rectify the situation, the pension providers should be able to calculate the backdated contributions.

It is not a legal requirement to report it to the Pension Authority if it is not fraud, but they still want to know about any non payment of pensions for more than 3 months:

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Thanks, I did come across that somewhere alright. But what I'm more concerned about is, assuming there is a will to rectify the problem, how can they go about it? They can't just lodge 30k plus the growth into my pension can they? This will put me over the limit for the year. And they can't backdate it. How to fix it?
 
It wouldn't be a big job to calculate the growth on the €30K if it had been invested in whatever fund you signed up to. Let's say it's €5K as you've suggested. I'd say the simplest way would be for your employer to make an employer contribution of €35K to your PRSA now, and then start adding your new contributions after that. In 2025 an employer is allowed to put 100% of your salary into a PRSA and your figures suggest you're well above €35K salary. Your employer and the broker can fight over who has to carry the can for the €5K but it shouldn't be you.
 
Dave Vanian said:
It wouldn't be a big job to calculate the growth on the €30K if it had been invested in whatever fund you signed up to. Let's say it's €5K as you've suggested. I'd say the simplest way would be for your employer to make an employer contribution of €35K to your PRSA now, and then start adding your new contributions after that. In 2025 an employer is allowed to put 100% of your salary into a PRSA and your figures suggest you're well above €35K salary. Your employer and the broker can fight over who has to carry the can for the €5K but it shouldn't be you.
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Great that sounds like a way forward. It's already taken quite a bit of time & stress over the last few weeks getting answers, with either side blaming the other, so I'm inclined at this stage to write a letter of grievance to all parties and give them a reasonable timeframe to sort it out after which I'll refer the matter to the Pension Authority. It shouldn't really be up to me to find solutions for them.
 
Dave Vanian said:
It wouldn't be a big job to calculate the growth on the €30K if it had been invested in whatever fund you signed up to. Let's say it's €5K as you've suggested. I'd say the simplest way would be for your employer to make an employer contribution of €35K to your PRSA now, and then start adding your new contributions after that. In 2025 an employer is allowed to put 100% of your salary into a PRSA and your figures suggest you're well above €35K salary. Your employer and the broker can fight over who has to carry the can for the €5K but it shouldn't be you.
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Can the policy start date be backdated though, it was never setup in the first place ? Otherwise his tax returns are incorrect for 2 years .
 
JoeRoberts said:
Can the policy start date be backdated though, it was never setup in the first place ? Otherwise his tax returns are incorrect for 2 years .
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The policy has just been started - start date last month.

Yes, I'm worried about the tax issue.
Salary deductions were made at source for last two years with relevant tax relief.

But those deductions never went into a pension - of course I wasn't aware of this. I didn't receive the money either. I understand my employer makes deductions on a weekly basis from salaries into an account and a monthly DD is paid to New Ireland on instruction from the broker. The broker hadn't completed setup of the pension and hadn't added my contribution to the New Ire DD figure. Obviously the figures didn't match and this went unnoticed by my employer. But now as you say, my returns are incorrect for last two years. So where do I go?
 
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Wait and see what they propose, including the tax issue. Had you picked a fund 2 years ago that you calculate the 5k growth from ? Or are you picking it now in hindsight ? Sounds high considering charges and funds investing monthly.
 
JoeRoberts said:
Wait and see what they propose, including the tax issue. Had you picked a fund 2 years ago that you calculate the 5k growth from ? Or are you picking it now in hindsight ? Sounds high considering charges and funds investing monthly.
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I had picked a fund two years ago - Passive IRIS. I may have calculated the growth incorrectly...

tinyurl.com

Pension 23 & 24 with 98% allocation.xlsx

tinyurl.com tinyurl.com

I calculated growth weekly from New Ireland's figures and compounded. I used 98% allocation but didn't add the 1% AMC - was just after a rough figure. I realize I'll have to get NI to do an actuarial calculation for the true figure.
 
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The contributions were tax relieved at source via salary deduction so I don't see a tax issue for you. They were on your payslip, right?

Insist that the €30,000 + growth are invested with 100% allocation. Even though it's an employer issue, I don't see why the broker should be rewarded with up to 5% of that contribution because they should have noticed that your plan wasn't added to the scheme and that they weren't getting paid on it. Maybe waiving the contribution charge can be the broker compensation to the dilemma.

You're holding all the cards here so the employer will know (via the broker) the implications for not handing over the money. They should resolve it between them. If it's a big scheme the broker may loose it if they don't offer some payment for part of the growt loss. You just have to let them know that you know your stuff.

Gerard

www.prsa.ie
 
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If the policy had been setup in 2023 and it was a case that the contributions were not paid over this would be OK. But there was no policy in 2023 so there can be no tax relief for that year. So an adjustment should be made to last years tax. Then he can be compensated by way of employer contribution this year including tax and lost investment return. Anything else is incorrect.
 
Oops..forgot about that technical aspect of it.

You've been promised it'll be sorted so just let them do that. They'll have to come up with a proposal but you have enough information from this thread to ensure it's sorted with no loss to you.
 
Thanks for all the responses - has been a great help. Difficult to know what to do in these situations!
 
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