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Pension blunders to be explained


Don Madge

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Posted

There's an interesting twist on this, depending on which side of the blunder one sits.

 

It appears that an Executive Agency of the Government has been paying out billions of pounds too much in pension payments to ex Public Sector workers for many years...money that those ex-employees were never entitled to.

 

That money came, and comes, from the taxes that I and fellow taxpayers were forced/are being forced to pay.

 

The Liebore Minister has now said that those public sector employees who received more moneys than they were entiteld to for years and years, will not be required to repay any of that taxpayer-funded overpayments.

Indeed, it seems that the overpayments will actually continue month on month, despite the blunder having been "discovered", until next April. Incredible.

 

 

Now, if the Governmnet (via HMRC) discovers that via some blunder of theirs, I have been paying too little tax, or have paid too little tax, they come after me with the full force of law to claw the extra out of me.

No ifs, no buts, you pay what you owe or (ultimately) you go to jail.

Every penny to be repaid.

 

 

So, a simple question, to ensure the consistency of treatment between public sector workers, and taxpayers...

Why on earth should all those overpayments, to which those workers were never entitled to, not be reclaimed?

Or, if they shouldn't, then the HMRC should, to be consistent with this amazing new Government approach to squandering taxpayers money, stop reclaiming underpayments of tax from it's taxpayers who fund it.

 

 

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Posted

Fine in theory Bruce and many senior civil servants with their face in the trough retire on enhanced huge pensions and very generous lump sums and may well be able to afford to repay many thousands of pounds without much sympathy from me.

 

On the other side are the vast majority of hard working and honest ex govt retirees who manage on a not very large pension due to lower pay and less years service and these people could be caused much hardship for something that is in no way their own fault.

 

The civil service, NHS and all govt pensions are very clearly defined final salary schemes and it should not be beyond the wit of pension dept.staff anywhere to be able to calculate and apply the right terms to the right person at the right time.

 

The calculations can be complex, but are generally very simple, abut still most employees have no idea how their pension is calculated - indeed many used to (and may still - I don't know?) believe that they would get a full two thirds final salary pension regardless of length of service.

 

As an aside, when I worked for the Pru, many years ago, I spent many hours advising govt employees just what their pension would be in reality and their oft need for in house AVCs. I got many looks of disbelief!

 

I am all in favour of all government pensioners having their pensions checked and their payments corrected to whatever they have actually paid in for and are actually entitled to, but I cannot support repayment of overpayments on the grounds that it would cause much unfair hardship to a large group of vulnerable people who have no means of generating further income or capital and who, in general, have conducted their lives with honesty and integrity.

Posted
Then I trust you will support all and every taxpayer who from now on refuses to repay any HMRC-discovered underpayments of taxation, which is what has been funding these overpayments to ex-public sector employees every month for (apparently) a decade or more.
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Posted

I think most people are capable of working out their tax liability for themselves these days and if not and with self assessment being the norm the use of a tax advisor or accountant is another possibility to ensure accuracy.

 

I doubt very much the level of income tax underpayment equals the pension overpayments?

 

I once knew a senior IR manager and he reckoned that there are as many overpayments of tax as there are underpayments of tax, mainly because people are sloppy or careless with their tax returns.

 

Just as HMRC will ask for any proven underpayments to be made so they will, in my experience, happily refund any overpayments.

 

It may not be a legal point but I think it is a moral issue, and that is the ability to repay, which is probably far greater in an employed/self employed person of working age with some years of earning potential ahead of them than in an elderly pensioner with little cash reserves.

 

It's all about being fair in my view and not about being vindictive and penny pinching which is what a few millions is in terms of the national debt percentage.

 

By the way my pensions are in the private sector so I have no axe to grind.

 

 

Posted

Rich - I think you're right. It is about being fair.

 

It's about actually being fair, for a change, to the taxpayers and private sector businesses who/which have been salted month after month thoughout the entire period to fund this grotesque situation of overpayments to Public Sector ex-employees for years and years.

Posted

I have no love for the current government but I would point out that for about 18 of the 30 years that this situation has run for (i.e. about 60%) the government was formed by the Conservative party. That being the case the error does not seem to be something to be laid at the feet of any political party.

 

As regards being fair. As human beings we all make mistakes. If I make an honest mistake I expect it to be me who bears the consequences of that mistake and if that means that someone else retains benefits they would not otherwise have had then so be it.

 

It is also worth bearing in mind that the reason for not insisting on repayment is that it would not be cost-effective - i.e. the costs to the taxpayer of chasing repayment would ourtweigh the benefits to the taxpayer of the income received. To me that seems to be the fairest way to proceed in this case.

 

Graham

Posted

Before poor old Brucey dies of apoplexy, I feel it only fair to point out to him that the error appears not have been one that applied to the calculation of the basic pensions, but that applied to the calculation of indexation: that is to say, the amounts by which the pensions should have increased year on year, due to inflation.  Unpacking that, on a case by case basis would, indeed, be just a bit complicated.

I should also point out that large numbers of those affected will have died in the meantime.  Does he seriously contemplate suing their estates?

Further, many of those pensioners will have paid tax on their pensions, so that reduced payments, retrospectively calculated, would entitle them to tax rebates, which would also take a wee bit of calculating.

As regards HMRC and general income tax, this is an issue where the individual supplies the data on which tax is calculated.  GIGO is I think the appropriate phrase.  Get you tax return right, and you will not have HMRC pursuing you for tax underpaid.  If they do, it is your own fault (generally :-)) 

These people did not do the calculations themselves, someone else did, and that someone else got it wrong.  I believe the error, at todays prices, is in the order of £3.70 per month per employee.  As above, many of the surviving employees will be now be quite elderly, and many will have retired on quite modest pensions.  Pursuing each and every one of them for their overpayment, and then calculating their tax rebates, would hardly contribute to a reduction in government debt, that so consumes Bruce.

They will have their payments reduced after next April: that is surely hard enough on them.  They are the blameless victims of someone else's mistake.  If you want to penalise someone, propose a levy on parliament, since it is the MPs over that period who were collectively in the driving seat when the crash took place.  However, don't be altogether surprised if they wangle a bit extra on their expenses, to recover the cost!

In the meantime, let he who is without sin, cast the first stone.

Posted

Hi Brian -

 

Aah, so that's perfectly OK then.

 

The taxpayers can once again be the only people who suffer, because it's only the Government Agencies fault that they are paying millions of pounds to ex-Public Sector employess who aren't entitled to the (our)money.

And the taxpayers are the easy option to fleece over and over again to fund such incompetence.

 

If any of us had tax owed, the Government Agency would be after us for every single penny owed.

But once they have our taxes, when they make mistakes of incompetence, for decades, about overpayments to ex-Public Sector workers, it's just entirely too difficult to adjust future payments to include an element of repayment.

So we'll let them all keep all that taxpayers money that they were never entitled to.

 

Why oh why did any of us opt to ever try to generate some wealth in/for the UK, instead of simply becoming one of the Public Sector GDP tax-leaches???

 

 

Posted

Perhaps you might like to refer back to my previous post Bruce - and look at Brian's again.

 

The reason why repayment is not being sought is that it would cost the taxpayer more than would be recovered. It would be a case of throwing good money after bad.

 

Graham

 

Posted
BGD - 2008-12-17 3:16 AM ................... Why oh why did any of us opt to ever try to generate some wealth in/for the UK, instead of simply becoming one of the Public Sector GDP tax-leaches???

Phew!  After that little outburst, it seems only proper to ask Bruce which bits, if any, of the public sector - staffed by these GDP tax-leaches - he would retain. 

Assuming he might retain, say, the odd tax-leaching copper, how, in the absence of a deskbound GDP tax-leach or two, would he provide for said coppers to be paid and equipped?  I can think of a few other examples, but the armed forces and the police seem to have been the earliest examples of state funded organisations to leach away GDP. 

It just seems such an odd argument, now we are seeing more and more clearly how well we have been served by those, shall we say, non-state organisations that have managed our commerce and finances so astutely. 

Don't be misled, I am not in favour of state takeovers of the whole of our economy, or even of any part of it in particular.  However, it does seem private capital needs at least some oversight and regulation (policing?) and, whether that supervisory role is to be paid for via salaries, or on contract (think SATS tests!), it will still leach GDP.  Surely the idea of a modern society without some forms of defence and supervision is illusory?  If needed, it must somehow be paid for: no?

Posted
GJH - 2008-12-17 8:29 AM

 

Perhaps you might like to refer back to my previous post Bruce - and look at Brian's again.

 

The reason why repayment is not being sought is that it would cost the taxpayer more than would be recovered. It would be a case of throwing good money after bad.

 

Graham

 

Graham - oh come on.

 

I think that's nonsense.

 

It would be a piece of cake to reprogramme the payroll computer system to pay "X" percent or "X" pounds less to each of the overpaid ex-public sector workers until the previous overpayments had been eventually recovered.

Not an option, of course, for all those who've been overpaid but who are no longer on that payroll (death, emigration), but perfectly easy for all those still receiving taxpayers monies via these pension payments.

 

Cost? Maybe a few tens of thousands of pounds.

Benefit to the taxpayers? Many many tens of millions of pounds, for years and years to come.

 

Posted

Bruce

 

You are just being pedantic! Whilst in principal the money should be paid back, just as it would if someone had received overpayments for other things they were not entitled to, the major difference is that lots of the people do not have any other income but the pension. So are you saying that they should have a reduced pension, when some will already be struggling to keep their heads above water in the current economic climate, just to keep to that principal and keep you happy? There are already too many people who die through hyperthermia etc because they cannot afford to heat their homes properly, I certainly do not want to add to that.

 

May I remind you that you chose to move to Spain and therefore you are not one of us who are paying for these overpayments, as a taxpayer for the last 29 years I am content for them not to have to repay the money so long as the error is corrected, which it will be.

 

Sorry, I'll have to continue later ... hubby has just brought tea in!

Posted
BGD - 2008-12-17 2:16 PM

 

GJH - 2008-12-17 8:29 AM

 

Perhaps you might like to refer back to my previous post Bruce - and look at Brian's again.

 

The reason why repayment is not being sought is that it would cost the taxpayer more than would be recovered. It would be a case of throwing good money after bad.

 

Graham

 

Graham - oh come on.

 

I think that's nonsense.

 

It would be a piece of cake to reprogramme the payroll computer system to pay "X" percent or "X" pounds less to each of the overpaid ex-public sector workers until the previous overpayments had been eventually recovered.

Not an option, of course, for all those who've been overpaid but who are no longer on that payroll (death, emigration), but perfectly easy for all those still receiving taxpayers monies via these pension payments.

 

Cost? Maybe a few tens of thousands of pounds.

Benefit to the taxpayers? Many many tens of millions of pounds, for years and years to come.

I have no idea, Bruce, of the extent of your expertise in computer programming. However, as one who worked in the field for over 30 years I think it somewhat rash to say that it would be a piece of cake.

 

First point. The minister's statement said that there were a number of factors, rather than a single one, which contributed to the overpayments. Any reprogramming would have to cater for the effects of all those factors.

 

Second point. I assume that you have no more idea than I do as to where the records of all the payments over the last 30 years are stored and whether they can be accessed by the current computer system - that is if they even still exist.

 

I will, of course, be first in the queue to applaud you if you can come up with a fully tested fix for the computer system which will recover more in overpayments than it costs.

 

Graham

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Posted
Experience suggests that government policy, computer systems, reprogramming upgrades, getting it right are not phrases that sit easily together!
Posted
Tracker - 2008-12-17 7:36 PM

 

Experience suggests that government policy, computer systems, reprogramming upgrades, getting it right are not phrases that sit easily together!

How very true Rich.

 

Most of my time in ICT was spent in Business Analysis - trying to find out what people actually wanted their systems to do. It might have been an easier life if I had become a rocking horse poo prospector (lol) (lol)

 

Graham

Posted

This sort of problem has been going on for years.

 

http://www.computerweekly.com/Articles/2001/09/17/182520/nao-reinvestigates-national-insurance-systems.htm

 

First we had Serps then we had modified Serps, now we have S2P (second State pension) and all the changes were introduced by various governments without proper due diligence as to how the changes would be incorporated into the taxation and pension computer systems that existed.

 

Result?

 

Total bloody chaos.

 

Bruce! - you are in the right place in Spain, their Health Service, and pension system actually works well.

 

Had lunch with a client who lives in Gers France - Taxes a little more complicated there but the health benefits far far better!

 

And the French Government has just introduced a scheme whereby if you invest in a company classified as being "Green" i.e. - wind farm generation, tidal energy etc, you get exactly that amount knocked off your tax bill.

 

And they don't tax their wine as much!

 

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