Dominic Harris: Good administration does not guarantee a satisfied member or an earlier resolution, but it is the foundation on which trust in pension schemes is built
In the first of a regular column series for Professional Pensions, the Pensions Ombudsman draws on his experience dealing with pension complaints to share lessons for the industry.
Naturally any ombudsman is mainly associated with things going wrong. We conduct dispute resolution, and often it's the ‘dispute' rather than the ‘resolution' that takes centre stage for the parties involved. So, it might be surprising that I want to use my first column here to talk about a case where the scheme did things right.
Before I explain why, a word to explain what this series is aiming to do.
I have spent over two decades working in pensions law – before becoming the Ombudsman I worked in the private sector – and I now have a perspective that very few people in the industry share.
The Pensions Ombudsman (TPO) now receives over ten thousand complaints every year, and my team and I see the full range of practices across the industry. That includes what goes wrong, what goes right, and what makes a difference to the member.
I agreed to write this column so that pension professionals can make use of those insights. Naturally that will sometimes mean flagging the bad, but it is also an opportunity to highlight the good.
So, with that in mind, I will introduce this column's case: CAS-96095-S3W4. It involved Ms W, a member of the Teachers' Pension Scheme, who applied for a refund of her contributions after leaving pensionable employment.
Under the Scheme regulations, members are entitled to such a refund only if they have less than two years' qualifying service. Establishing that figure was not straightforward, as Ms W had worked for several employers, and the administrator needed information from each of them before it could determine her eligibility.
The importance of open communication
In handling this process the administrator showed the importance of open communication and attention to detail.
It contacted the relevant employers promptly. When awaiting information, it wrote to Ms W to explain the delay, told her which employers had not yet responded and invited her to follow up with them directly if she wished. When one employer's response contained errors, the administrator went back, queried it, and corrected the record. It kept Ms W informed at each stage and, when it committed to respond by a certain deadline, it did so.
The administrator found that Ms W did have more than two years' qualifying service and was therefore entitled to pension benefits rather than a refund.
In challenging that conclusion, Ms W argued that the administration had been delayed and that she had suffered significant distress as well. I did not uphold the complaint – further details of my decision are available in the determination.
Proactive communication
What I want to highlight for the reader is not the technical aspect of the decision, but rather the behaviour of the administrator.
When a process involves third parties, such as employers, communication with the member can tend to go quiet while waiting for someone else to act. The member feels forgotten, frustration builds, and parties become more entrenched. Even if a resolution is reached, the relationship between member and scheme manager can be left damaged.
The administrator in this case did not do that. It took responsibility for proactive communication, telling Ms W what it was waiting for and from whom, why this was necessary, and what she could do in the meantime.
That transparency did not resolve the underlying frustration as evidenced by Ms W's continued complaint, but it did mean that when the case came to me for determination, I had no doubts that the administrator had done everything in its power to keep her informed and engaged. Furthermore, it was able to provide me with written evidence of all of its good work to accompany its detailed formal response, making the decision clear cut.
I would encourage all scheme administrators to aim for that as a standard.
Whenever possible we should keep to deadlines, whether those are regulatory or self-imposed, but where a process stalls, get in touch with the member before it passes to explain why and what the next steps are. When other parties or complexities are involved, make it clear to the member and where the hold-up lies.
Good administration does not guarantee a satisfied member or an earlier resolution, but it is the foundation on which trust in pension schemes is built. It is also the best protection you have when a complaint arrives at my desk.
Dominic Harris is the Pensions Ombudsman
