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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.
@edpacket fingers crossed mate. MR would at least have their response in writing to present to a judge
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.
Dealing with the CMS is going to put me in an early grave.
After receiving the letter I referred to in the thread above, I wrote to the chap at the Financial Investigation Unit with a list of my counter arguments (including reference to the table in para 36020 etc.) and he replied to say that the decision hadn't been implmemented yet and that he would refer my comments to his senior leader for consideration to see if his provisional decision / assessment should be changed in any way before being implemented. So far so good.
Then today I received an official letter notifying me of my changed CM amount and it seemed that the provisional assessment had been implmented without any further changes. So I have today emailed the FIU contact again just to confirm if the senior leader review had actually occurred and that no changes were the result of that (as seemed to be evident by the official recalculation notice that I received today).
He has replied to say that the review with his senior leader hasn't in fact happened yet and that it is scheduled for this Thursday, but that the assessment has in the interim been applied.
So it is just so incredinly stressful - from my perspective not only are they not following their own guidance but they seem to want to increase the stress levels by implementing a decision that is still under internal review ! I presume this has now gone to my ex as well, and if the CMS on review decide (hopefully) that they got it wrong, then my ex will then be on their backs asking them why they have changed it - especially without an official mandatory reconsideration !
It seems such a poor process - unprofessional in my view and sure to increase the stress levels of all parties !
@Will99 Hi mate, really feel for you, why so they have to make it so [censored] difficult, all we are trying to do is prepare for later life, we need to live. I have this fight coming up, exactly the same position as you. Its great that we have the freedom of information stuff available, imagine if this was not the case, what these people would be getting away with. Keep us updated mate, do not let them grind you down, I will let you know how I get on
OK I just want to highlight something and ask a question on here. I am still in conversation with the CMS / FIU so I may get answers that way.
Figures below are indicative :-
My current year assessable income for CM is about £39k. This comprises of :-
£32k gross taxable PAYE income
£7k rental profit from the property I let out.
Total = £39k
Due to the recent variation on notional income grounds, I made full financial disclosre to the Financial Investigations Unit, and they wrote to me with their decision to include the following :-
£7k notional income
£9k which are my additional pension contributions
Total additional assessable income = £16k
As per my posts above I wrote back with counter arguments, including that it seems that they have clearly not followed their own process vis a vis the pension contributions (discussed earlier in this thread). Also I am arguing that the notional income should also not be included either as it is calculated on ISA funds I have which are there to pay off the interest only mortgage on the property that I let out, and that I am already being assessed on the rental property profit as I state above.
Initally the FIU said they would consider my comments with his senior leader before implementing the assessment above. Anyway, it has been implemented before those discussions have taken place, and yesterday I got a notice of my new CM amount. My current year CM payments are to rise as there has been more than a 25% increase on my income. Also as I am close to the end of the CM year, I have a lot of catching up to do in the few remaining payments. In short my CM payments are going up from 300 and something to 900 and something.
My angst is centered on the following
1. I received the notice yesterday, giving me three days notice of an almost trebling of my CM amount (the next payment is due on Friday 1st October)
2, Regardless of the notional income, if the penskion contributions had not been originally included and this assessment that has been implemented, then I would not have breached the 25% threshold and I would not have had a current year recalculation. However that assessment has now been implemented and current year contributions changed. However if on review these pension contributions are removed from my assessible total, that by itself will not then be >25% of my new higher total assessible income, so I fear I will not then get a recalculation back down again ! So I fear I will have lost out materially (nearly £2k) on current year contributions just because they implemented an assessment that they later agreed was incorrect ! Is this how it really works anyone ?
Update - I just spoke to the CMS and they tell me that :-
1. The advised figure included back pay for the year to date. Considering the short notice and the fact that this is still under review they have agreed that, as a temporary measure, I should only pay the new monthly amount going forward until the review / challenge is settled. (Not sure if this relates just to the internal review - i.e. the discussion my FIU chap is having with his senior manager - or also to a MR as well).
2. The 25% theshold relates only to earned income. So if any element of additional assessible income changes (such as a decision taken not to assess my pension contributions) then this will trigger a fresh recalculation regardless of amount. There is no 25% threshold required here.
@Will99 Hi fellow sufferer, how did you get on with this, they are playing games with me on my contributions, I have put forward exactly the same response in relation to pension payments, couldnt make it up, keep fighting mate
I made my submissions to the MR in what I thought was a very well worded letter, including the calculation in para 36020 backed up by pension statements. Still waiting to hear a response back, but I certainly will post it here when I hear.
Apparently the head of the FIU is handling it.
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