Members of the £11.4bn Mineworkers’ Pension Scheme have received notices from HM Revenue & Customs incorrectly telling them that they owe thousands of pounds in tax.
The scheme outsourced its administration to Capita in December 2017. In October 2017, the committee of management for the British Coal scheme was forced to respond to member concerns at its annual general meeting over the appointment of Capita.
At the event, Dame Kate Barker, chairman of the committee, disclosed that the scheme had “received communications from a few members concerned about Capita’s ability to administer the scheme”.
We have a lot of frail pensioners who are receiving these letters
Keith Woodward, scheme member
Since then, members of the Mineworkers' scheme have mistakenly been issued with new tax codes following the implementation of a new electronic interface between Capita Employee Benefits and HMRC.
In letters seen by Pensions Expert, some members were told that they owed tax in excess of tens of thousands of pounds. Scheme member Keith Woodward received a letter asking for £13,522.96. Another member, Dean Wood, was asked for £56,150.01.
The wrong pension payments were processed
Every month, Capita provides HMRC with details of the amount of pension paid to MPS pensioners. This information is used by HMRC to set pensioner member tax codes.
The method used for delivery of this information to HMRC has recently changed. Capita is now required to load the payment information to a secure HMRC web portal.
After making an enquiry over his HMRC letter, scheme member Paul Gee was told by HMRC in an email response that the error had taken place during the transfer of the data.
“Unfortunately when we loaded the first set of pensioner payments to the secure web portal they were inadvertently recorded as pension payments from another pension scheme (in most cases Axa) rather than pension payments from the MPS,” the email reads.
“This has led HMRC to review the tax codes of the impacted members and in some cases change them.”
HMRC is aware of the error, and is currently working to correct these tax codes.
An HMRC spokesperson said: “We are sorry that this pensioner received a coding notice in error. Where we are provided with incorrect information, we work hard to put matters right... We will ensure that no customer will lose out as a result of this.”
Capita should not have been chosen
Capita has recently faced criticism for its performance as an administrator for schemes relating to GPs, teachers and Barnet Council.
The decision to outsource scheme administration to Capita was taken as part of a drive by the British Coal Staff Superannuation Scheme board to lower administration costs.
At the October AGM, Barker revealed that the proposal received by Capita during its tendering exercise included significantly lower costs than those commanded by previous administrator Aon.
Chris Kitchen, general secretary for the National Union of Mineworkers, has fielded enquiries from members over the HMRC letters. He emphasised that it is not the role of the union to administer the scheme.
“All we can do is monitor the situation,” he said. “It was [the scheme’s] decision to go with Capita, we weren’t consulted.”
Keith Woodward, who currently receives the mineworkers’ pension, said that the appointment of Capita to administer the scheme “should never have happened”.
He said: “We have a lot of frail pensioners who are receiving these letters. Total shock to the system… it could be very damaging to those [members].”
Woodward also expressed grave concerns over the protection of members’ data.
Capita apologises to members
In a statement on its website, the MPS said it had made Capita “fully aware of our disappointment and we shall be reviewing the incident with them in due course to ensure that this sort of incident isn’t repeated in the future”.
British Coal members raise Capita admin concerns
The £9.4bn British Coal Staff Superannuation Scheme has had to calm member concerns at its 2017 annual meeting over its decision to appoint Capita as its administrator last year.
A Capita Employee Solutions spokesperson said: “Following a change to HM Revenue & Customs’ online PAYE portal, an incorrect update was made in processing information for members of the Mineworkers' Pension scheme."
The spokesperson added: “This issue has been resolved and all members affected will shortly receive letters to advise that they do not need to take any action. We sincerely apologise for any concern and inconvenience this has caused.”
