As Forensic Accountants we deal a lot with Pension Loss quantum calculations for Personal Injury and Fatal Accident Dependency claims.
The Pension Loss topic typically lends itself well to White Label schedule drafting – and so the Court’s permission to use a forensic accountant, as your agent, to prepare the calculations is not required.
So, if you are not dealing with the detail of such claims on a regular basis, or do not like ‘number work’ or ‘scheme rules’, then pension loss calculations is an aspect of a claim you may find it easier to have specialist input on. This frees you up to focus on the law and the claim.
Public Sector Pensions
Pension loss related to jobs with Government funded occupation pension schemes can be very valuable indeed – but they are often complex too.
We are talking here about claimants that work in the NHS, teaching (schools and Higher Education), Local & Central Government, Police, Fire Service, Armed forces etc. There is important interaction between – pay scales, pension contributions, accumulating pension benefits and the eventual pension and lump sum. Each scheme has its own regulations (and peculiarities) and there can also be tax implications with pension benefits.
Private Sector Pensions
Whilst many people in the Private Sector might rely on the ‘humble’ Workplace Pension – there are some ‘very nice’ Private Sector occupational pension schemes, where there is a need to keep an eye on their funding and future viability.
Some important aspects of pension loss quantum (particularly with Public Sector schemes) are:
- Pay awards – are you using the latest pay scales, or best estimate as at Trial? Do your Earnings Loss calculations ‘mesh’ with your Pension Loss calculations? Do you have the right pension contribution deductions? Are you claiming Earnings Losses before or after contribution deductions?
- Inflation – given that recently inflation has been over 10%, don’t ignore the benefits of CPI uplifts.
- Legacy pension scheme membership – many claimants have benefits in older (pre-2015) Public Sector pension schemes as well as the in the newer (CARE) schemes.
- The McCloud option – gives rise to implications for claimants with Private Sector scheme membership between 2015 and 2022 – and this is not all yet ‘cemented’ in legislation.
- Ill-health pensions – Parry-v-Cleaver, the Longden adjustment, tax treatment of the Actual pension.
- Alternative income & taxes – the interaction between ill-health pensions, alternative income and tax can impact loss quantum. The issue here is where there is income from alternative (with injury) work and an ill-health pension: how should we allocate taxes to get to the net alternative work earnings? The treatment of taxes can make a significant difference to loss quantum. Well worth taking advice if you have a case with these components.
If you want an illustration – see an earlier blog I wrote on this topic about on Parry V Cleaver, a twist to watch out for.
Claims Involving Income From Trades / Business
With claims involving the self-employed, a family/small limited company, partnership or higher levels of PAYE income – then there may be Personal Pension planning and tax relief issues that need to be addressed in the Personal Injury claim.
Do not underestimate the impact on Loss Quantum of the pension. For many individuals their occupational pensions are hugely valuable employment benefits. There are lots of changes around with Public Sector pensions too. It can be well worth having an initial chat with a specialist – just to see check you are on the right tracks or if a particular case has features that might benefit from White Label input. Nothing to lose from a chat.
At Formby Forensics, we’re passionate about helping our clients and we’d love to chat with you about the best approach to take. Don’t hesitate to reach out – we’re always happy to help!
Richard Formby FCA MAE