HMRC In U-Turn Over Pension Statements

13 November 2017

HMRC In U-Turn Over Pension Statements In 2016, HMRC said that following the completion of reconciliation exercises between themselves and the UK's retirement schemes in December 2018, they would send letters to individuals with details of their "contracting out" history. However, it has been revealed this week that this will no longer be the case.

In an update, HMRC said that "This change is being made because there have been developments in the provision of pension scheme information since we first started the changes to end contracting-out."

Experts have been voicing their opinions on the matter, and the consensus seems to be that the U-turn has come about because HMRC fears being flooded with calls from people querying the figures that they receive.

Neil Walsh, a pensions expert from Prospect, the trade union that represents engineers, managers, scientists and other specialists in both the public and private sectors said:

"I suspect HMRC and DWP have decided they do not want to set hares running. The information in those letters would have enabled people to check whether or not records of the dates they were contracted out, and with which employer, were correct."

"Those letters could have caused an awful lot of members to ask questions both to their pension schemes, and the Department for Work and Pensions and HMRC."

"A can of worms…"

Malcolm Mclean, former head of the Pensions Advisory Service agrees, and said if the state pension calculations are based on wrong information, "it might mean that the deductions made in the calculations are also wrong".

"Therefore, for people that are reaching their state pension age in the next five years, it could mean that they will get less of a state pension then they should do, because the figures are wrong."

He went on further to say "the department knows that they will be opening a can of worms if they start sending out millions of statements about contracting out details".

"First, people won't understand it, and second, the figures might be wrong and people might start to question. The reality is that there is a number of people, perhaps millions, who may well lose out for having a wrong GMP and wrong contracting out values."

Former pensions Minister Sir Steve Webb has also voiced his opinion on the matter, saying that he believes individuals should be sent the information by HMRC so they can check that it is correct.

"The very fact that pension schemes talk about GMP 'reconciliation' proves that they know the numbers don't always square with what HMRC think. In my view, it is still important for individuals to be sent the relevant information directly."

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