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Recoupment of Unpaid Pension Contributions


Payment of employee pension contributions is a requirement under most public service pension schemes, with the relevant rates set out in the rules of the scheme of which a person is a member. Employee pension contributions are necessary to secure a member’s pension benefits under their pension scheme.

Such contributions may include main scheme contributions, spouse and children’s scheme contributions and contributions in respect of certain other benefits under the member’s pension scheme (for example, Purchased Notional Service).

In some cases, it can transpire that an employee has not paid the totality of pension contributions for which they are liable, for example, where an individual is a member of a contributory pension scheme but the necessary periodic contributions are not paid for some or all of their service. This could arise due to administrative error, for example:

  • where an individual is correctly placed on a PPC (Personal Pension Contribution) pay scale on starting a new employment, but the required pension contributions are not deducted from their salary,
  • where, following a change in employment, role, etc., deductions from salary relating to pension contributions cease in error,
  • where, on resumption of work following a leave of absence off pay, pension contributions are not re-commenced when an individual is placed back on payroll.

A contributions liability may also arise for reasons other than underpayment of periodic contributions from salary, such as:

  • where an individual wishes to reckon an earlier period of non-pensionable service and they are required to pay employee contributions to do so,
  • where an individual has not paid periodic Spouses’ and Children’s Pension Scheme contributions for a period of their service, or where Spouse and Children’s contributions are owed in respect of notional service.
  • where an individual is purchasing service and pensionable allowances fall to be included in their final pensionable remuneration (the amount owed in this scenario is calculated in accordance with the rules of the purchase of notional service scheme and can only be determined at retirement. Further information is available on our Purchase of Notional Service page).

Where pension contributions are outstanding, an individual remains liable for those contributions regardless of the reason for such a liability having arisen.

Recoupment of unpaid contributions

Where it is discovered that an individual in a current employment is not paying their required periodic contributions (such as main scheme contributions or spouse and children’s scheme contributions), arrangements should be made to begin the deduction of periodic contributions from salary immediately. Arrangements should also be made to recoup the underpayment relating to the earlier period of non-deduction as soon as possible. This may be arranged via an agreed method, such as through ongoing salary deduction by doubling of contributions over a period of time, with any remaining outstanding contributions being recouped at retirement.

Every effort should be made to ensure recoupment of the unpaid contributions as soon possible, with the aim of clearing the liability prior to an individual’s retirement. Any outstanding contributions liability that is not cleared prior to an individual’s retirement will be collected from the individual’s retirement lump sum/preserved lump sum/death gratuity etc.

It is the responsibility of each individual to check their payslips regularly to ensure that the appropriate pension contributions are being deducted.