I paid extra voluntary contributions into my pension but the scheme denies they existed: STEVE WEBB replies
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I worked for a building society between 1987 and 1994 and during my time there I paid into the final salary scheme.
I also paid added voluntary contributions as well to boost my pension pot.
I am now retired and have been receiving my pension from the scheme for around two years.
Recently I contacted the current pension administrator to check if the amount that I have been receiving includes these added voluntary contributions, as there has never been any mention of them on any correspondence.
Surprisingly they have said that they have no record of these extra contributions and that they are unable to assist further.
This firm is the third administrator the scheme has had over the years, so it is difficult to obtain the information that I need to get to the bottom of the issue.
I'm afraid that I no longer hold any pay slips from the time I worked at the building society and don't recall ever receiving any statements about the pension value over the years nor any confirmation with regard to the extra contributions.
All in all I am at a loss as to where to go with this so can you help?
Steve Webb replies: The process of tracking down missing pensions will hopefully get a great deal easier at some point in the next few years when the first pensions dashboard goes live.
But for now it has involved a bit of detective work to find out what happened to your extra contributions.
Not unreasonably, you no longer have payslips from all those years ago. But, more surprisingly, you told me that you never received any paperwork in respect of the additional contributions.
As it turns out, this gives us a clue as to what happened.
Broadly speaking, Additional Voluntary Contributions (AVCs) can work in one of three different ways.
First, they can be used to buy extra rights in the salary-related or ‘defined benefit’ pension of which you are a member.
For example, you might be able to pay extra to buy additional years of service within the scheme.
Second, they can be used by the trustees of the scheme to build up a ‘pot of money’ or defined contribution pension in a separate section of the same scheme.
This would be invested and give you a pot of money at retirement. Prior to the introduction of ‘pension freedoms’ in 2015, you would have been expected to use this pot to buy an annuity (an income for life).
But another possibility is that you were making what are known as ‘free standing’ AVCs.
These might be facilitated by your employer but paid to a completely separate ‘pot of money’ type arrangement.
When you talked to your scheme administrator about AVCs it initially denied all knowledge, which would have suggested we might be talking about ‘free standing’ AVCs.
And a bit of online searching revealed the likely external pension provider for people working for your company at the time. But it did not hold a pension for you.
However, you have just told me that your scheme administrator has now been in touch to say that it does in fact have a record of your AVCs.
It turns out that these were used to buy you additional rights within the defined benefit scheme, and you are already receiving an enhanced pension as a result of making those contributions.
This also explains why you never received separate paperwork about a separate pot of money pension that you were building up somewhere else.
I’m pleased that this mystery was solved and that you have received what you were due.
In your case, the pensions dashboard would not actually have been any help, because it will only show pensions which have yet to be taken, and you have already started taking yours.
But for others who are trying to track down a separate ‘pot of money’ pension I am very hopeful that the dashboard will result in large numbers of people being reunited with money which they thought they had lost or even never knew they had, and without needing to understand all of these technicalities.
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