A Lesson For Employers: Ian Moan v Revenue Customs & Commissioners

Employers have certain pensions auto-enrolment obligations. However, one aspect that has gone under the radar relates to employees who have protected their lifetime allowance (LTA) for pension savings. This was introduced back in April 2006 and there are various forms of protection. Some allow a person to continue to build up a pension, but others do not. Employers should find out their employees’ LTA position and deal with the provision of auto-enrollment information correctly. Otherwise, unhappy and expensive consequences can arise, which almost happened in the case on Mr Moan below.

In the recent case of Ian Moan v Revenue Customs & Commissioners , the employee had been auto-enrolled into his new employer’s scheme after he had told them he would lose his “Fixed Protection 2016” if he was made a member. They told him to fill in a form, which he did, and he thought it was the end of it.

He was supplied with a work smartphone and the employer communicated with him via this. It turns out that there was a long-running issue with the employer’s server which was not synching with his phone. This meant that emails either did not arrive, went into junk, or vanished before he could read them. The employer sent an email on 6 March 2017 (a few months after he joined) informing him that it had exercised its right to postpone auto-enrolment but he was now being auto-enrolled.

Deductions were taken from his salary, but due to the IT hitches, he only became aware of what happened when he saw a payslip several months later. By this time, HMRC had withdrawn his 2016 Fixed Protection. He appealed, and the basis of this appeal was that the employer had not “given” auto-enrolment information in accordance with the regulations. As such, his opportunity to opt-out in time (which would have saved his 2016 Fixed Protection) had not started to run.

The appeal was allowed. This is because the auto-enrolment date used for Mr Moan by the employer was wrong and so the purported postponement had not met the requirements under the regulations. His auto-enrolment date should have been 17 October 2016 and not 1 February 2017. It was held that the time limit for opting out of auto-enrolment is clearly linked to the provision of auto-enrolment information. This meant that the time limit for opting out could not start until the correct information was given, and the notice he had given seeking to opt-out was therefore valid and his 2016 Fixed protection was re-instated.

What would the outcome have been if the enrolment information was correct, would it have been “given” on 6 March? Where a person is known to use email and has not objected to its use, then information received at the email address provided should be regarded as “given,” but it could not necessarily be assumed. If the information given on 6 March had in fact been accurate, this would have been treated as successfully “given” and Mr Moan would have lost his appeal. If this had been the outcome he would have most likely sought financial redress from his employer.

It is therefore important for employers to maintain an effective communication strategy for pensions information and be alert to the possibility that employees may have protected their LTA and the impact their auto-enrolment will have on this.

If you are experiencing any pension issues, Setfords would be very happy to help. Please get in touch with us by phone or using the form below.