Tazi Hupefi
Member
The rules of the Railway Pension Scheme say
18B Off-Set for Crime of Fraud
If a Member is dismissed from Service because he has incurred a monetary obligation to or caused a
financial loss to the Participating Employer arising out of a criminal or fraudulent act or omission or, if the
Member resigns to avoid such dismissal, the Participating Employer may require that the benefits in
respect of the Member (other than GMPs and benefits arising out of a transfer payment) shall be
reduced by an amount that the Trustee determines on actuarial advice to be equivalent to the obligation.
If the obligation is greater than the value of the benefits which may be reduced, the benefits shall cease
to be payable. If the Participating Employer requests, the Trustee shall pay to the Participating Employer
the amount of the obligation or, if less, the value of the reduction in benefits.
The Member shall be given a certificate specifying the amount of the obligation and of the reduction in
benefits. If the amount of the obligation is disputed, no reduction in benefits shall be made until the
obligation has become enforceable under the order of a court or arbitrator appointed (failing agreement
between the Member and the Participating Employer) by the President of the Law Society or, in
Scotland, by the Sheriff.
It certainly isn't automatic just because someone has been dismissed, but it is definitely possible in some circumstances. It would require criminal conduct though, not just gross misconduct.
Likely to be held to be "unfair" other than in exceptional circumstances. Some of it is not even likely to be legal, because a company has a statutory obligation to contribute to a pension scheme unless the employee specifically opts out. They would therefore have to leave at least an equivalent amount of the statutory minimum, but that would require the contract of employment to specifically permit that, which I doubt many would as it is such a rare and specialised scenario.
As advised in my earlier post (and confirmed in the pension guidance quoted here), if the employee does not agree to that deduction i.e. it is disputed, the only means it can possibly be pursued is via the County Court in England or Sheriff in Scotland.
Given small claims costs aren't recoverable, and even on other claim tracks would be expensive for both employer and employee, it is incredibly unlikely to get to that point, especially as companies do not like details of internal matters, such as frauds committed by employees being placed on public record, and possible media attention. Even if the TOC won their costs at court, the question comes as to whether the employee (now unemployed) would even be able to repay them, meaning the cost of legal action may well exceed the cost of the pension contributions.
In any event, the amount a TOC would be able to recover via the civil process would be the amount fraudulently obtained, NOT the whole amount. So someone nicking £20,000 from their employer, but who has been there for 30 years, at worse, and after a court hearing, could see their pension reduced by £20k, but they'd still keep the rest of it.