23 Nov 2020
Workers in Britain’s public sector may be facing a payout following a new court ruling on a “contracting out” process.
For people who would have been eligible for basic and/or additional state pensions, they could have been able to “contract out” of the additional state pension completely. Whereas others may have been able to contract out of the additional state pension if their employer operated a contracted-out pension scheme, reports The Express.
This scheme permitted workers and employers to pay National Insurance at a reduced rate, meaning members who had contracted-out didn’t contribute to the additional state pension, but rather accumulated workplace pension schemes.
The government stated that the additional pension from a contracted-out pension scheme is typically the same, or higher than the additional state pension, should the person in question not have contracted-out.
Although the government has attempted to make the pension system as fair as possible, the contracting-out system has proven to be somewhat polemic.
A recent court ruling has determined that rulings on historical gender equalisation from 2018 also extends to those who have transferred their pensions after 1990.
This may have huge consequences, and could result in revaluations, meaning many retirees may receive boosted payments.
deVere founder and CEO Nigel Green said of the ruling: “This landmark ruling means up to a million savers are now entitled to have their payments recalculated.
“The pension top-ups for some savers will run to several tens of thousands of pounds.”
He went on to add: “This will be an expensive blow and an administrative nightmare for many businesses who will now need to trawl decades of data and then shell out this money to these pension holders.
“But all those who have transferred their retirement nest eggs must demand the additional money that is rightfully theirs as soon as possible.”
Mr Green concluded: “The High Court has ruled that trustees might have breached their duties.
“Now is the time for savers to get back their money that they prudently saved to enjoy their retirement.”