Pension scheme trustees work hard to ensure that members understand their benefits, that their questions are answered promptly and that they can have confidence that their retirement is in safe hands. But from time to time a member will feel that something has gone wrong and look to the trustees to put it right.
Our pensions litigation team share ten practical tips for the effective handling of member complaints.
1. Effective member communication
Misunderstandings and disappointed expectations are at the heart of many member complaints. Clear and effective communication with members can help to avoid what might turn into a time-consuming and costly IDRP dispute.
2. Keep up to date with industry practice
It is important to stay familiar with industry developments, guidance issued by the Pensions Regulator, decisions published by the Pensions Ombudsman and how other pensions schemes are interacting with their members.
Not only will following and adopting best practice enhance members' positive experience when they interact with your administration team, it can also help both to reduce the risk of complaints and also to put you in a stronger position to answer any complaints or issues that do arise.
3. Understand the complaint
Complaints will not necessarily include a comprehensive account of the relevant events or clearly identify the issues – some may focus on "red herrings" or peripheral issues of limited relevance. It is important to take a step back from how the member has expressed the complaint and work out what the member says has gone wrong and how they say it should be put right. Focusing on the right issues from the outset can help to streamline the complaint and make it easier for the IDRP decision-maker to reach the right answer.
Identify at the outset whether there is any information that the member has not provided that you need in order to understand and respond to the complaint. Requests for information should be clearly expressed, and it often helps to give the member a brief explanation of why you need the information in order to deal properly with the complaint.
4. Help the member to understand the issues
It can be helpful if the member has taken the opportunity to obtain free advice from the Money and Pensions Service and/or the Pensions Ombudsman Early Resolution Service.
This can help the member get to the heart of the matter and to take an objective view of the strengths and weaknesses of their case. Where you are able to deal with the Early Resolution Service rather than the member direct, this can take some of the heat out of a sensitive dispute.
5. Follow the timetable
The Pensions Regulator generally expects IDRP decisions to be made within four months, and for a decision to be notified to the member within 15 working days.
Missing deadlines can easily be interpreted by a member as a sign that their complaint is not being dealt with properly and fairly – so if more time is needed to investigate the complaint, let the member know in good time.
Where the member also makes a data subject access request, this will have its own statutory timetable, which also needs to be followed.
6. Handle the complaint fairly
It is important to ensure that the member understands what steps are being taken to investigate and respond to the complaint and how long this will take. Trustees must treat members fairly and apply the scheme rules faithfully. It will sometimes be the case that a member has identified a real issue with the way a scheme has been administered or benefits calculated, and trustees should not try to find ways to avoid reaching what might be an inconvenient conclusion.
7. The outcome
If the complaint is not upheld, it is important that the member is given a proper explanation of the decision, with any technical pensions concepts explained in a user-friendly and accessible manner. Not only will this help the member to see that their complaint has been dealt with seriously and fairly, but it is likely to reduce the chances that the member will decide to pursue the matter further.
8. Distress and inconvenience
It may be the case that the member is not entitled to the financial remedy that they are seeking, but that it is nonetheless right to recognise that something has gone wrong and that the member should be compensated for distress and inconvenience (described by the Pensions Ombudsman as "non-financial injustice"). The Ombudsman publishes guidance which can help trustees to decide whether such a payment might be appropriate and the amount that should be offered.
If the member is dissatisfied with the final outcome of an IDRP complaint, they will usually be able to take the matter to the Pensions Ombudsman. This puts the dispute into the hands of an independent third party: the trustees can now focus on persuading the Ombudsman that they were right to reject the complaint, rather than acting as decision-maker.
The member might put forward new arguments or rely on additional factual information, so it is important to respond to the case put to the Ombudsman, rather than just repeat the IDRP response.
It will usually be appropriate for the trustees to take legal advice when faced with an appeal to the Ombudsman. It will often be helpful to take legal advice at the IDRP stage, particularly if the complaint raises any difficult legal issues (or points on which it is important to know what approach has been taken in past Ombudsman cases) or if it appears likely that the complaint will be pursued beyond the IDRP process.
As well as ensuing that complaints and disputes are handled properly, there will be occasions where the most sensible response is to try to achieve a negotiated settlement, for example to avoid having to devote time and resources to defending an Ombudsman complaint. Where a dispute requires an investigation of events or correspondence from many years ago, or where it raises complex legal or actuarial issues, the costs involved can quite rapidly outstrip the amount in issue.
But think of the broader context. Although a complaint may have been brought by a single member, and may itself have a modest financial value, it may well raise issues which affect a broader section of the membership with significant financial implications. Will settling an unmeritorious claim on cost/benefit grounds set an unfortunate precedent for the future?
We would be delighted to speak with you about these points, using our experience of handling member complaints, from the first communication with the member though to successfully defending claims before the Pensions Ombudsman, as the basis of a practical case study.