There are numerous cases where employees suffer from the consequences of an employer’s unlawful actions. A prevalent example of this type of situation is when an employee loses out on retirement benefits or pension due to changes made by their employers.
However, losing a pension is not similar to losing earnings. Pension loss may not even be evident for a long time, and claimants may never take note of it at all. Some people may have an idea that they may come across pension loss but are still not able to put a value on it. Thankfully, there are ways to claim a pension loss without troubling yourself. Click here to find out more. Overall, it’s a complicated matter, and this article aims to shed light on different types of pension loss and how to go about that loss.
Types Of Pensions
The upside to this type of pension is that even if a claimant was unemployed for a certain period, it doesn’t stop their National Insurance contributions for a full-state pension. This means that even if a person goes through this type of pension loss, it may not be an issue in most Employment Tribunal (ET) cases.
This type of pension is relevant to people employed in a particular company. Therefore, this section deals with occupational pension losses, a scheme most workers are a part of automatically after joining a company. It falls into two main categories:
Defined Benefit (DB)
This type of scheme consists of an employee’s entitlement to a defined retirement pension calculated using their length of service and earnings. One common type of DB scheme is the “Final Salary” pension, which is valuable for an employee. Often, they’re provided by some private or public sector companies but are usually rare.
Defined Contribution (DC)
Under this scheme, both employee and employer add a fixed percentage of money into a pension pot. Once the employee retires, the same money in the pot helps them buy benefits. In this case, the pension value is not decided beforehand, even though the employees can have an estimated amount in their minds. Most newer schemes offered in the private sector are DC or defined contribution schemes.
Compensation With A DB Pension
With DB pensions, the biggest downside is that the loss value is hard to determine. It’s also assumed to be bigger than a DC scheme loss. There are times when it is possible to figure out the loss based on contributions from an employer. For example, this could be the case if the ET suspects that the claimant did not stay in that employment for an extended period. Therefore, the loss is thought to be smaller. For a complete calculation, the parties may require the following information.
- The DB scheme type
- The retirement age of a claimant
- The projected income of a claimant at retirement
- The projected income of a claimant if they had stayed in the old employment till they retired.
Compensation With A DC Pension
To assess the loss with a DC pension, a few factors are taken into account. One such factor would be the employer’s contribution value if a certain employee stayed and was not dismissed. In this case, the employer’s contributions are additional earnings for an employee.
To calculate, the key information you need is the amount or the percentage of an employer’s contribution to the pension. Here is some more useful information.
- The claimant’s contribution rate
- Presence of any other benefits in the scheme such as dependant or survivor benefits in case the claimant dies
- The claimant’s age at which they are eligible for the pension
- The existing value of the pension pot or the invested funds
Both employees and employers can get the required information for a pension provider. Even if the claimant is working in new employment that offers pension rights, they may need the same information again, with only the claimant having access to it. The new employer can also be requested for help.
However, in conclusion, understanding the features and requirements of a pension plan or scheme is the only way to determine your losses and filing claims to get them. Some services claim for pension losses on your behalf, and it’s quite feasible to avail them in case the procedure gets too complicated.