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HMRC internal manual

Pensions Tax Manual

Other authorised payments: genuine errors: contributions paid under bad advice

Contributions paid under bad advice

An arrangement under a registered pension scheme might have been mis-sold or purchased under a misapprehension and, following the recommendation of the Financial Ombudsman Service or Pensions Ombudsman, a refund of contributions is made to the member.

Unless the refund is either a:

  • refund of excess contributions lump sum - see PTM045000, or
  • short service refund lump sum - see PTM045000 

the refund will be an unauthorised member payment. (An unauthorised payment that is made in accordance with an order by the Financial Services Ombudsman or Pensions Ombudsman would not be subject to the scheme sanction charge - see PTM135200)

Also, there would be an unauthorised member payment should there be an agreement between a registered pension scheme and one of its members to refund contributions because the member is dissatisfied with the administration of the scheme or has a change of mind on investment strategy -see PTM045000.