A retired individual who had paid additional voluntary contributions (AVCs) into their pension scheme encountered difficulties when the current administrator claimed no record of these contributions. The individual, who worked for a building society between 1987 and 1994 and contributed to a final salary scheme, had been receiving their pension for approximately two years. Upon contacting the administrator to verify if the payments included these AVCs, they were informed that no such records existed and that further assistance could not be provided.
This situation was complicated by the fact that the scheme had changed administrators multiple times over the years. The retiree no longer possessed pay slips from the relevant period and did not recall receiving any statements about the pension's value or confirmation of the extra contributions. Without this documentation, the individual was unsure how to proceed with resolving the discrepancy.
Steve Webb, a pensions expert and columnist, addressed the issue, noting that tracking down missing pensions is expected to become easier with the upcoming introduction of pensions dashboards. However, for the immediate case, detective work was required.
Webb explained that AVCs can function in three main ways: buying extra rights within a defined benefit scheme, building a separate defined contribution pension pot within the same scheme, or being 'free-standing' AVCs paid to a completely separate arrangement. Initially, the administrator's denial of any record suggested the possibility of free-standing AVCs. Online research did not reveal a relevant external pension provider for the individual's former employer.
However, the administrator later contacted the individual to confirm that they did, in fact, have a record of the AVCs. It was determined that these contributions had been used to purchase additional rights within the existing defined benefit scheme. Consequently, the retiree was already receiving an enhanced pension that reflected these extra payments. This clarified why no separate paperwork for a distinct pension pot had been received.
Webb expressed satisfaction that the mystery was solved and the individual was receiving their due pension amount. He also noted that pensions dashboards, while beneficial for locating un-claimed pension pots, would not have assisted in this specific case as the pension was already in payment. For individuals seeking to locate separate pension pots, Webb remains optimistic that dashboards will help reunite many people with lost or unknown funds.