Other authorised payments: genuine errors: other payments made in error to a pension scheme
Other payments made in error to a pension scheme
A sponsoring employer of a registered pension scheme, that is an occupational pension scheme, might make erroneous payments to the scheme other than erroneous contributions (PTM146600) or other erroneous payments might be made to a registered pension scheme.
A sponsoring employer sets up a standing order with its bank for making monthly capital and interest payments to a registered pension scheme in respect of a loan from that scheme to the employer.
At the loan repayment date all capital and interest payments are paid in full but, as the bank does not cancel the standing order, a number of unnecessary monthly payments are made to the scheme out of the employer’s bank account. Upon spotting the error, the matter is rectified by the scheme making a repayment to the employer of an amount representing the overpaid monthly instalments.
Borrowing is to be undertaken by a registered pension scheme and all of the necessary checks are undertaken to ensure that the amount to be borrowed is within the appropriate limits for that intended borrowing not to be unauthorised borrowing - see PTM124000. The amount to be borrowed is within the appropriate limits and a request for borrowing of that amount is made to the scheme’s bank.
Despite the request for a specific amount to be borrowed by the scheme, the scheme’s bank mistakenly deposits a greater amount into the scheme’s bank account; that amount being over the appropriate limits. Upon discovering the mistake the scheme manager arranges for the excessive amount to be repaid back to the bank as soon as reasonably possible.
As the payments were made as a result of a genuine error and rectified as soon as reasonably possible upon the error being spotted, the payment by the scheme to the employer would not be an unauthorised payment and the excessive amount deposited into the scheme’s bank would not be unauthorised borrowing.