Fan Mo
Fernanda Bajanca
Quentin Loisel
Pension Opt out Payments
15 Comments
I guess this is what we need to find out initially..We have very poor communication with finance and HR and all we have been told is that if we opt out within 2 years, we will get all our contributions back..
Are you sure you are on a Salary Sacrifice scheme? The usual pension contributions are not salary sacrifice, because the Employer is obliged by law to put you into a pension scheme. Salary Sacrifice would be additional pension contributions on top of the normal one. Pension contributions are always excempt from tax, normal or additional (Salary Sacrifice) doesn't matter. I would check what your contract says, maybe someone from the administration misunderstood something.
Hi Pinar,
My university added the difference to regular salary, backdated to when I started the contract (which was when I opted out) and of course minus income taxes.
This happened at the end of UK financial year (April/May) and I did not even have to file a request. I assume it would be similar at other universities.
The official USS guide is here: https://www.uss.co.uk/~/media/document-libraries/uss/member/member-guides/post-april-2016/leaving-the-scheme.pdf
Salary sacrifice schemes are explained here: https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye
How it usually works is as follows:
- If you have opted out of the pension scheme after 2 years, all contributions (both Employee and Employer) stay with the scheme, so they are effectively lost to you.
- If you have opted out after 3 months but before 2 years, you can get your (Employee's) contributions refunded, but the Employer's one stay with the scheme.
- If you have opted out before 3 months you will get a refund of the Employee's contributions, while your Employer will get a refund of the Employer's contributions.
I don't know about Salary Sacrifice schemes which put extra money into the pension, but if you opt out the Employer might get its contribution back. It would be good to ask USS about this, in my experience they take a while to reply but the answer is very helpful.
Since for the Marie Curie Fellowships also the Employer's pension contribution come from the total sum, in all the cases the Employer's pension contribution is paid back to the Employer, you will get the corresponding sum (minus taxes and NI) in your final balance payment.
For your comment Markus. This is very helpful. So according to your last paragraph we should be receiving the Employer's contribution since we are Marie Curie Fellows and money comes from the total sum. So in this case losing the money after 3 months of opt out is not applied to us. First of all I guess I need to check if we are with Salary Sacrifice Scheme or not, or is this the default regulation?
Hi Pinar, you're welcome!
No, if you have opted out after three months the Employer (the University) has already paid their contribution to the pension scheme (USS) and they're not getting it back from them (normally). This has nothing to do with the Marie Curie, but applies to all pension schemes (UK law). So in your case this money is gone, and you won't get it back, unfortunately. You only get the money that the Employer gets back from the pension scheme, which is only if you opt out before 3 months. Sorry!
I don't think you're on a Salary Sacrifice scheme. This is not the normal regulation - Salary Sacrifice means that you get less cash but some other benefit, for example Childcare vouchers (if you have a child). This needs to be agreed between Employer and Employee though, usually in the working contract. Check what it says in your contract. In particular, I find it very strange that Giacomo is on a Salary Sacrifice scheme - the usual pension contribution is not Salary Sacrifice because the Employer is obliged by law to put you into a pension fund. Salary Sacrifice would be additional pension fund contributions on top of the normal one.
This is very upsetting news. Also I am suprised because we have specifically asked them about pension opt out in the beggining of the program and all we have been told was if we opt out we will get whatever we contributed. I know that administrations are not supposed to give us any suggestions on pension but I don't think they are entitled to misinform us when we ask about it. Can you please point me to any Marie Curie Specific guidelines perhaps? I just don't understand why would Marie Curie follow general UK Laws while it's a fundemantally different "work" concept..
This is very upsetting news. Also I am suprised because we have specifically asked them about pension opt out in the beggining of the program and all we have been told was if we opt out we will get whatever we contributed. I know that administrations are not supposed to give us any suggestions on pension but I don't think they are entitled to misinform us when we ask about it. Can you please point me to any Marie Curie Specific guidelines perhaps? I just don't understand why would Marie Curie follow general UK Laws while it's a fundemantally different "work" concept..
There are two contracts involved in this - one is between the EU and the university (the Grant Agreement), and one between the university and you (the Work Contract). Since you are working in the UK for a UK company (the university), the Work Contract is governed by UK law. That is the same in all countries (not only the UK), independent of the type of work you do or where the money comes from. What is important is always the place where you work, and the seat/nationality of the company, and both are the UK in your case.
If you opt out from a pension scheme before 2 years, you will get your contribution back (the Employee's one). If you opt out before 3 months, also the Employer gets its contributions back. Both of this is UK law. Now normally, the Employer would just keep the Employer's contribution for itself. However, for Marie Curie fellows the university has to also follow the Grant Agreement. In the Grant Agreement it is stated that the university has to use all money it gets from the EU (Living+Family+Mobility allowance) for the fellow. That means, if at the end of the fellowship there is money left over (due to exchange rate, or if they got back Employer's contributions) they have to pay you a final balance payment. Maybe there was a misunderstanding when you asked the administration, or they didn't know the specifics of the Marie Curie? Do you have anything in writing? Possibly they are legally right when they say you get you get back what you contributed, because usually "your contribution" is only the Employee's contribution. Only with the Marie Curie they have to pay you left over money at the end - this would not happen with any other source of funding. So if the university didn't get back the Employer's contributions from USS because you opted out only after 3 months, there is simply no money left over.
The Grant Agreement is here: http://ec.europa.eu/research/participants/data/ref/h2020/grants_manual/amga/h2020-amga_en.pdf Keep in mind that this is a contract between the EU and the university, so you legally cannot force them to obey anything in it. But of course the EU will not be happy if the university doesn't keep the contract. You have to look at the date the university signed it, so probably only version 2 applies in your case. On page 122, it says specifically that the beneficiary (the university) must comply with the country's labour law (so UK law). Special provisions for Marie Curie ITN are on page 409 and following.
I forgot: Did you already get back the Employee's contributions? The university has one month to give this to you, from the date you tell them: http://www.thepensionsregulator.gov.uk/opting-out.aspx. This is again UK law, independent of the Marie Curie final balance payment.
We opted right before 2 years and yes we got back employee's contribution already. But employer's contribution (which is taken from Marie Curie pocket) is missing. And like I said before, no one in the project would predict that they would lose quite a substantial amount of money when they opt out after 3 months. We all been informed that if we opt out before 2 years, we would take back whatever taken from us in the name of pensions. My understanding is that that employer's contribution also belongs to us, on the basis of that EU agreement which says all money should benefit the fellow.
So we had a meeting with our Finance department today. We have been given two different responses within the same meeting! (the joys of our employer)
1- Employer contribution is gone after 3 months of opt out (and this is why we only got back Employee's contrbution), like you also mentioned
2- Employer contribution is locked with pensions and will not be taken until retirement
So overall, they say that the money is not with them. We also called our pension and the money is not there either. We just can't understand why a huge amount of money can vanish like that.
Do you know anyone in EU that we can contact about this issue?
Hi Pinar, sorry to keep you waiting.
USS has a guide to leaving: https://www.uss.co.uk/~/media/document-libraries/uss/member/member-guides/post-april-2016/leaving-the-scheme.pdf. On page 06 (Refund of contributions) it says that "The contributions paid to the scheme by your employer are not refundable." So USS got the money from the university, and they are just keeping it. I don't know if you will get some pension from them when you retire based on just the Employer's contributions, or if they use it only to fill their deficit.
As far as I understand, that all money must be used for the benefit of the fellow means that the university is not allowed to keep left-over money. However, if it has been paid into a pension scheme for you, it has been used for your benefit. Of course I am not an expert, so feel free to ask a pensions specialist, or someone from the EU. The first contact person from the EU is the Project Officer for the Marie Curie ITN, who is listed on the Participant Portal. You probably don't have access to the Participant Portal, but your supervisor should have (or if not, then whoever coordinates your ITN). On the Participant Portal, it is possible to directly send a message to the Project Officer, which is surely the fastest way. Good luck!
Hello Markus:
about your comment: "if you have opted out of the pension scheme after 2 years, all contributions (both Employee and Employer) stay with the scheme, so they are effectively lost to you".
why if they stay in the scheme they are lost? I'll still get them at the pension age + interest.
Yes of course. I meant that you are not getting the money now, but you'll get a pension when you arrive at pension age, assuming that a) the pension scheme still exists then (which is probable, but see the recent news regarding USS), and b) there is some agreement between the UK and your country with respect to pensions (which might not be the case after Brexit). Getting pensions from a foreign country always depends a lot on the legal agreements between the country of your citizenship and the country where you paid into a pension scheme, and is by no means automatic. One big benefit of the EU is that all member countries must compulsorily take into account pension rewards accrued in another member state, at least for state-backed pensions. I might be somewhat pessimistic about this, but a) there is Brexit and the negotiations do not seem to go forward very well, and b) USS is a private scheme.
(This is assuming you retire in your country of citizenship. If you retire in the UK, things might be different.)
Dear Pinar,
I don't know the answer, but this is very interesting. I'm a Fellow at Imperial College and I was told that I can't get any refunds for the months I was in the USS scheme because I partecipated through a Salary Sacrifice scheme. Were you (and the other Fellows) part of a similar thing too (as in money directly taken from your gross salary, before taxes)?