Q: I have been getting a pension from my former employer for a few years now. I turned 60 a few months ago and have since started getting my state pension. However I have had a letter telling me that because I get a state pension my work pension will be reduced. I don't understand how that can be right, as I paid contributions into my pension for years, as did my employer. I've asked the people in my former boss's HR department but they just keep saying that it's right and that's just how the scheme works. Can you help please? I had made a lot of decisions based on getting both pensions and now I can't afford to do all of the things I'd planned. YT
A: Some final salary pension schemes are set up in such a way as to allow employers to reduce the income that retired workers get from their company pension schemes when they start to receive their state pension. So when you stop work, if you are eligible for a pension payment from your employer's scheme, you get that in full until you reach state pension age. From then on you get the same amount, but it is made up of the state pension and your work pension.
When an employee is offered the chance of paying into a company scheme details like this will be explained by the boss or in the pension handbook. However many people don't take those details on board at the time or forget them later, and many don't read through or fully understand all the terms and conditions of the scheme.
These final salary pension schemes have been popular with employers because they allow companies to pay people a pension before they reach retirement age, so the practice is also called pension "bridging". The money you have been receiving from your employer since you took early retirement is the bridge that has given you an income between stopping work and qualifying for your state pension. Without that bridge you wouldn't have had any income for the past few years unless you'd carried on working. Employers have been able to use these schemes to persuade people to leave work early, because they've been able to offer them an income at 55 and above, but below state pension age, as an early retirement incentive.
The rules of company pension schemes are always clearly set out and you should have been made aware before retirement that the amount from your employer would be reduced as soon as you qualified for your state pension.
Andrew Wilkins, a senior pensions consultant with the international financial services firm Philip T English in Banbury, says: "I have a great deal of sympathy with you as your financial planning is now in difficulties, but your latest company pension projection should have made it clear that the amount you would receive from you occupational scheme would be reduced at retirement age.
"There are fewer of these schemes around because many employers are closing final salary schemes. They can no longer afford to run them. But those who still do offer these particular final salary schemes should make sure their employees are fully aware of the terms and conditions."
Some experts do take a more negative view of these types of schemes, saying the ability to claw back money disproportionately penalises the less well-off. Someone enjoying an annual pension of £50,000, for example, would hardly notice, but it will have a dramatic impact on someone on £5,000.
If you want further help get a copy of your scheme details and talk to the advisers on occupational pensions at www.pensionsadvisoryservice.org.uk.
Q: I suspect the second hand car I recently bought has done more miles than claimed. How can I find out, and if so can I take the car back? FG
A: You're really asking if the car has been clocked – turning back the odometer to lower the mileage reading. Bizarrely it isn't illegal to alter the mileage but sellers should own up it. If you find out or suspect your car has been clocked, or that the private seller is a dealer, contact your local Trading Standards department at www.tradingstandards.gov.uk. If the car isn't 'as described' or the seller didn't have the right to sell it you may be able to get your money back but don't wait or you will have 'accepted' the car.