Pension contributions - what is deemed a diversion of income ?
By the way - my ex actually works for the CMS ! Or did - she is recently retired.
I am reassured that cases involving CMS staff are dealt with by a secure team isolated from other CMS staff. However I for one wasn't even aware that there was a notional income variation, so I think my ex was undoubtedly in an advantageous position through her employment to know what can and can't be claimed, and how it all works.
@Will99 SAR is subject access request. Basically you can ask them to send you all the information they have from you. They send the records of calls, letters and all interactions. They send the printouts via post. A lot of things get blackened.
You need to fill your name, address, CMS case number, name of child etc. in part C.
If going through appeals I would recommend doing a SAR, this will give you everything they hold on you. There will be things redacted (to protect other party usually) but you may get a feel for how they have come to their decisions, including possibly being able to demonstrate that the rationale is illogical or flawed.
All the best.
At the moment I only have the letter from the Financial Investigations Unit informing me of their decision to include notional income of £X plus the full value of my additional pension contributions in a new income figure to be used for a CM recalculation, and that as this is > 25% greater than the income figure used in the current year that I will have my current year CM amount recalculated. They say I will get another advice from the CMS detailing what my new CM amount will be.
Unless you wise people advise me otherwise I was going to reply to the FIU to essentially raise the following queries :-
- Can you clarify why you have decided to include my ISA funds in a notional income calculation, when you had earlier advised me verbally that you were not interested in these funds after I had explained that they were solely for repayment of the interest only mortgage on the property that I let out (and that I am already being assessed on the rental profit from that property) ? I.e. what has changed to change your decision on this ?
- Can you advise me of the actual basis of calculation for the notional income figure you have determined should be included in my CM calculation ?
- I understand that this investigation was prompted by a request from my ex for a variation on the grounds of notional income. Given this then can you reassure me that it is however still within your remit to also make a judgement on diversion of income (i.e. my pension contributions), especially when a request for a diversion of income variation had already been requested earlier and subsequently rejected ?
- Notwithstanding the above point, given that you have made a judgement in regard to my additional pension contributions, can you reassure me that the correct process and calculations have been performed ? I refer here to the following document ( https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1012626/volume-3-variations.pdf ), and in particular I note the guidance in paras 32014, 32019 and 32020. My understanding of this guidance is that
- 32014 allows for a determination on whether the level of contributions is 'excessive'. It also suggests that 12% is a minimum reasonable amount in any circumstance. Further para 32018 says that the DM should not take the whole amount of the diverted income in to account - only the amount that is deemed to be unreasonably diverted. This guidance taken together does not allow for the full value of my pension to be included in the CM calculation
- Further 32014 relies on the age that pension contributions started. This information has not been sought from me and I presume not known by yourself, and so I would suggest that to use the table in para 32014 is not appropriate. In any case the history of my pension contributions throught my working life is very patchy - some periods I contributed nothing and other periods I did contribute (information that you also did not seek and presumably do not know). This would suggest to me that using the table in 32014 is not appropriate - especially given the guidance in para 32019 that the DM should initially refer to the table in para 32014, with the guidance in para 36020 to be used in complex cases (which I suggest mine is given what I say above) or cases where the NRP disputes the initial decision (which I certainly do).
- 36020 therefore seems a more appropriate table to use. This relies on my projected pension income. As far as I am aware you are not aware of this figure either - however in a previous letter I have previously given my own estimate of this at £Y/year. Following the guidance in the table it would seem to me that no further sum should be counted as diversion of income in my CM calculation as the retirement income figures falls within the 50% allowable threshold in the table (for my age and current gross income figure).
- In summary I cannot see how the official guidance, if correctly followed, can possibly lead to a decision to include the full value of my additional pension contributions in a new CM calculation. Please advise me of the process and calculations you have done which leads you to this decision.
Or should I leave all this to my MR or appeal ?
@Will99 I would use of online calculator to put all the details of your pension pots, your proposed monthly pension contribution, your retirement age and get an estimate. If it its less than 50%, I will send them the projection document and demand they use paragraph 36020. They FSA table is useless for CMS calculations as there are so many variables. I think the FSA created it for other purposes, mainly to suggest a person that just started contributing a suitable amount so he can retire with dignity. The CMS just took that table and suggest to use it but it is not appropriate, most people think that it refers to the age of the NRP. It is a total mess. I think even the CMS is not sure how to use it as they can see it is not appropriate.
I use the following calculator and it tells me I am going to be very poor when I retire 😓 😓 😓. I can put 90% of my salary and I still wouldn't make 50% of my current salary.
@edpacket Absolutely agree, the FSA table is a mess, the 50% percentage for someone earning over £50K, makes far more sense, but this has to be a percentage of your salary, before you make any pension contributions, as this is the salary that you are making provision against. They cannot take off the pension contributions you presently make and say that is your salary, why not take off car finance etc. No the pension is a form of savings, so whilst CMS take off, quite rightly, against the gross salary, this is not the basis that pensions companies tell you what you need in retirement. I cannot see, based on what you have said, that they have any option other than to allow the extra contributions, we all have seen the freedom of information paperwork, which tells a case worker they have to use. I would request the MR and then if they still refuse, issue the court paperwork and see if a judge agree's with what appears a crazy response. The success rate of tribunals, is far greater than that of MR's. When I challenged my contributions, the response from these clown, was, "the CMS are not able to advise on pension matters", quite right, so a jumped up case worker, should not be able to risk our retirement, by coming to an unqualified opinion, of what is a complex matter. Every single online pension company, will state more or less the same percentage amount that you need in retirement, ARE THEY ALL WRONG !
@jgdad I think they won't refuse. They just don't understand so you have to explain them. They cannot go with what is in their guidelines if you point it out. If you call 3 times, they give you 3 different answers.
I've submitted my counter arguments (referring to the relevant paragraphs in the guidance document) to the chap from FIU who I have been dealing with and who has written to me to inform me of their decision (and also to inform me that I will be getting a letter detailing the new calculation from CMS). So I don't know if this will actually achieve anything at this juncture or if I will basically have to make the same arguments in an official MR request once I get the 'official' notification of the new CM calculation. Anyway we will see what happens ...
I would like to thank everyone for contribuiting to this thread, especially jgdad and edpacket, and Daddyup also.
Just for an "amusing" contrast, 20 years ago, my ex-wife was trying to avoid paying maintenance for my kids (I had custody), she was a high earner at the time so decided to put 100% of income into pension (no idea what she was actually living off). I went for diversion of income and they determined that it was unreasonable, and rules that none of her contributions at all counted to reduce her liability, so the was assessed on her total income. I was expecting that they would allow some of it, so I was very happy at the time.