Pension debacle: ‘This was a complete mess and the worry ruined Christmas for myself and my wife,’ says one pensioner
Furious BAE Systems pensioners say they have suffered stress and hardship due to drastic cuts of up to 50 per cent in their pensions after a bungled handover to a new administrator.
Complaints have flooded in to This is Money about the tax code chaos that ensued after HMRC was wrongly informed tens of thousands of pensioners were paid twice in the changeover month.
No one had received any extra pension, but the failure to resolve the mess caused last August meant massive tax deductions began late last year.
One former BAE employee whose pension was halved in December said he and his wife were left with very little money and the worry ‘ruined Christmas’.
Many felt it was a ‘disgrace’ BAE’s pension scheme and its new administrator Mercer had told pensioners to sort out tax code problems direct with HMRC, causing them further frustration over long waits on its jammed phonelines.
This is Money exposed the fiasco after an 81-year-old retired BAE software boss contacted us to say HMRC was wrongly chasing him for £12,000 extra in tax, and had already deducted around £1,370 from his payments.
The BAE Systems pension scheme changed its administrator from Equiniti to Mercer on 1 August.
It says: ‘We sincerely apologise for the confusion and inconvenience caused to our pensioner members and want to reassure them that there is now a solution in place with HMRC and ultimately any overpaid tax will be refunded.’
We asked the scheme if it had tried to help pensioners suffering hardship or whether it would be making compensation payments.
It replied that it explored a wide range of options but they could have caused additional tax implications for pensioners, and it had prioritised working with HMRC and Mercer to find a resolution. Read BAE Pensions’ full statement below.
Meanwhile, Mercer has now sold its pension administration business. It provided pension administration services to the BAE pension scheme up to and including 31 December, and Aptia UK took over from 1 January 2024.
Aptia told us last week around 33,000 tax codes had already been updated by HMRC, and a scheme-wide resolution for members affected by incorrect tax codes had been found. Read Aptia’s latest statement below.
An HMRC spokesperson says: ‘The tax collected for PAYE customers is based on information provided by their employer or pension provider.
‘We’ve been working urgently to correct people’s tax codes, appreciating the impact on those affected in this case. The vast majority have already been corrected.’
Mercer said last week: ‘Thank you for bringing this matter to our attention. Mercer does not comment publicly on the detail of individual cases.’
It did not respond to a request for further comment. Equiniti declined to comment.
‘Absolutely disgraceful customer service from BAE pensions trustees’
This is Money has received a stream of messages from BAE pensioners about the tax debacle. They say:
– Resolving the tax code issue with HMRC was the responsibility of the organisations involved who failed to do their job properly, not individual pensioners.
– Pensions have been dramatically reduced and even halved in many cases due to incorrect tax deductions, which has caused hardship and stress particularly over Christmas
– It was a great struggle to contact HMRC, with long waits of over an hour to get through on the phone.
– Formal complaints and requests to Mercer have not been answered, and service by Mercer has been significantly poorer than by Equiniti, in terms of answering the phone and dealing with administration issues aside from tax codes.
– Some BAE pensioners are in care homes which has caused concern about problems paying fees as a result of unexpected tax deductions.
– Two people aged in their 80s report that they either struggle or are completely unable to go online, and have found dealing with the problems caused by the tax code error very stressful.
– One has lost their married couple’s allowance as a result of the problem with their tax code.
– The transfer of administration of the BAE pension scheme to Aptia is a concern.
‘It might not seem a lot of money, but it is to us…’ BAE pensioners tell their stories
‘This happened to me in December leaving me with only half my pension to pay my bills and made sure myself and my wife had very little money for Christmas. My wife only has her state pension.
This was a complete mess and the worry ruined Christmas for myself and my wife. None of the parties concerned was willing to accept blame or to willingly help in any way.
Between Mercer, Equiniti and the trustees, I feel that they were all trying to pin the blame on each other while the pensioners spent time and money trying to sort out the mess they made.
Whether this was incompetence or ignorance, this should have been dealt with before the pensioners were made to suffer the consequences.
After a considerable amount of time spent on the phone to [HMRC], I have managed to get my code altered to what I believe it should be.
Worryingly, I have recently received a letter from the trustees stating that the trustees and Mercer have been in discussions with HMRC to update and apply reviewed codes for all pensioner members.
This, after leaving us to our own devices up to now. I am concerned that this will mess up my tax code again.’
…
‘I’m emailing for my wife. She has a BAE pension but since the handover to Mercer things have changed. Pension was £ 105.52 monthly. Pension now £58.36 monthly.
It might not seem a lot of money but it is to us. To make matters more difficult my wife was diagnosed with Parkinson’s and is off work.’
…
‘My gripe was with the BAE Systems pensions team. I thought their attitude was a total disgrace in leaving members of ‘their pension scheme’ to sort it out themselves.
The stress it must have caused some of the members who like myself must have wondered how to rectify the problem and how long it would go on for and just before Christmas when everyone is on holiday was terrible.
BAE have recently sent correspondence out saying they have been involved with helping resolve tax codes with HMRC and everything should be sorted now but their original stance was totally unacceptable in my opinion.’
…
‘It seems as if the handover of the running of the pension scheme has been incompetently handled which could have led to hardship for some pensioners and Mercer just seem to have washed their hands of it and left the pensioners to deal with the situation without any help whatsoever which is very shoddy.’
…
‘I’m having exactly the same problems with my BAE pension since Mercer took over as administrator. My net pension has dropped by nearly £400 a month since they took over.
I’ve rang HMRC twice, which takes over an hour to get through to them.
HMRC have again changed my tax code to a K code now for my BAE pension. I haven’t had my monthly pay since this has changed. So I cannot let you know if I’m worse off now. But it’s still all so annoying and worrying.’
…
‘BAE Systems pension trustees have the responsibility to overall manage the scheme, irrelevant of who the administrators are.
Response from BAE tension trustee, sort it out yourself by phoning HMRC, which hundreds did every day, waiting in line for an hour to get a response.
Now even after this pensioners have still not been paid their full pension. Absolutely disgraceful customer service from BAE pensions trustees with a total neglect of duty.
Also it has caused an extra burden onto the already very busy HMRC helplines. All due to the trustee not verifying the process.’
…
‘I’m one of the thousands who got caught up in this scandalous situation.
My December pension was half of the amount I expected which put me in a very difficult situation over the Christmas period.’
What does BAE Systems’ Pensions say?
‘We sincerely apologise for the confusion and inconvenience caused to our pensioner members and want to reassure them that there is now a solution in place with HMRC and ultimately any overpaid tax will be refunded,’ said David Green, trustee chair of the BAE Systems Pension Scheme.
‘We’ve worked tirelessly with Mercer and HMRC to find a scheme-wide resolution for this complex issue. HMRC has now issued updated tax codes for the vast majority of our pensioner members, which will be applied to their next pension payments at the end of January and early February.
‘We continue to liaise with our pension administrator and HMRC to work through the remaining cases. This is the highest priority for our pension trustees and will remain so until the situation is resolved for all our pensioners.’
In response to our questions on whether the scheme is considering hardship payments or compensation for the pensioners affected, Mr Green added: ‘We explored a wide range of options to make interim payments to our pensioners, none of which could be implemented scheme-wide without potentially causing additional tax implications for pensioners who were already dealing with a temporary reduction in income.
‘Therefore our priority had to be to focus on working with HMRC and Mercer to find a resolution as quickly as possible, which we’ve done.’
What does Aptia say?
‘Aptia, a dedicated pensions, health and benefits administration specialist, launched on January 1 2024,’ said a spokesperson .
‘Aptia was formed by the acquisition of the UK pension administration businesses of Mercer and as such will be responsible for the administration of BAE Systems pension schemes from January 2024.
‘We are aware that a large number of tax codes have recently been updated by HMRC which will be applied to the next pension instalments which are due to be paid at the end of January or beginning of February depending on the relevant scheme payroll date.
‘Aptia has the utmost empathy for those affected by this issue and is striving to make things simple and easy for all our clients and their members.
‘We will continue to liaise closely with our clients to strive for good member outcomes and to provide them with the support and information that they need.’
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