What issues can cause delays in providing a member's leaving service benefits?
To help manage member expectations when they leave a scheme, there are a few common issues to be aware of that may cause a delay in providing details of a member’s leaving service benefits.
Date of Leaving v Payroll Runs
An employer normally runs its payroll on a regular basis and may use an external contractor for this.
Delays can occur particularly for monthly paid people due to timing issues. For example if someone leaves the scheme early in the month but the payroll is not run until the end of the month it may be a few weeks before the scheme administrators are notified of leavers.
Final Contributions
Contributions must be paid across to the trustees’ bank account before the 19th of the month for non-electronic payments, and the 22nd of the month for electronic payments, following their deduction.
For members of DC schemes in particular, this may mean that final contributions are not received until several weeks after the member has left. As benefits are based purely on the value of the pension fund, it is not possible to advise members of their units or the fund value until the final contributions have been received.
This issue does not arise with members of DB schemes unless they pay Additional Voluntary Contributions.
Scheme Renewal Date
Most schemes have an annual renewal date when all the members’ data is updated including salary data.In a DB scheme the benefits are salary related so if the member leaves around the time of the renewal date, the latest salary information may not have been received from the employer.
In some instances the employer may even be involved in pay disputes which can cause further delays.
Other Parties
For members of defined benefit schemes who pay Additional Voluntary Contributions (AVCs), those benefits are normally held separately from the main scheme benefits, for example with an insurance company or building society.
AVCs can now be transferred independently of the main DB scheme benefits but when a member leaves it is better to provide all the information to the member at the same time.
However, as the other parties involved have their own work priorities and timescales, this is not always possible.
Disclosure Regulations
Just a final note of which the member may not be aware but which administrators must always keep in mind.Many schemes have agreed target times in which to provide the member with their leaving service options but there are also disclosure regulations that must be adhered to.
| 2 months | Leavers must be automatically provided with a statement of their options within 2 months of the trustees receiving notification that pensionable service has ended. |
| 3 months | If a member requests a transfer value they must be provided with the information within 3 months of the request. |
Regardless of this it is helpful to provide a member with leaving service options as soon as possible after they have left
