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OPDU
Report 27 June 2010 - Annual Risk Conference Special Edition
Disasters – Prevention & Protection
What has gone wrong?
Malcolm McLean OBE, formerly Chief Executive, The Pensions
Advisory Service
I was very pleased to be given an opportunity to speak at the
OPDU Annual Pension Risk Conference.
It was probably one of the best conferences of its type I have
ever attended with an array of really good speakers, all with their
own individual slant on the subject matter in hand. In fact the conference succeeded where others often fail – there
was a clear theme but little or no overlap or duplication between the different speakers and
interest was maintained throughout. The Conference was very
professionally chaired (well done Peter Murray) and congratulations must go to Jonathan
Bull and his team for devising and managing the event so
successfully.
My session obviously looked at risk on the back of my experience
with TPAS and tried to provide answers to a series of questions
relating to complaints from scheme members, how they were caused,
how they could best be dealt with and so on. There were six main
questions to be addressed.
1. Why do
complaints /
disputes occur?
There are many reasons. Poor customer service and / or sloppy
administration are often a direct cause of the problem. The
frustration caused by an inability to obtain the expected level of
pension is another, as is a general lack of understanding about the
system and how it works. We must remember that pensions are often
inherently complicated and you cannot expect the man or woman in the
street to be experts in their own right. Sometimes – often I would
say – a complaint is more a plea for help than anything else. Times
are changing as well. Whereas many people do not understand, and
perhaps don’t want to understand, pensions they are becoming
increasingly aware of the importance of providing for themselves in
later life and are willing to battle for their rights to achieve
that end. It is true that, as a society, we now have a creeping
claims culture and a more litigious propensity underpinning it.
There is such a thing as a serial pensions complainant – I know I
have had to deal with several of them.
2. What are the
most
common types?
The most common types of complaint seen by TPAS are attributable
to delays or mistakes – what we would call maladministration. Ill
health cases, or more precisely an inability to obtain an ill health
pension, are also now fairly prevalent given that there has been a
general tightening up on the qualifying rules in recent years. At
one time it would have been sufficient to have been able to show an
inability to do your own job; now it is more likely to be an
inability to do any job of a similar nature. A very different and
much harder test to satisfy.
3. How can
complaints / disputes be avoided?
First of all, it must be emphasised that there is no way you can
completely eliminate any possibility of a com-plaint or dispute
arising. Nor should you assume that an increase in the number of
complaints received in a particular year is necessarily a fault on
the part of the scheme. But it might be, and trustees should be
looking into such an incidence to satisfy themselves that there is
nothing systemically wrong with the way they are operating and of
course, if there is something wrong, they should be taking steps to
deal with the problem at the source. Prevention is generally better
than cure and it is by running the scheme efficiently and to time,
that you stand the best chance of avoiding, or at least minimising,
problems later on. As always, good communication with members is the
key. An inability to speak and write in clear English is one of the
major barriers to good communications in pensions and so often we
see letters, emails and leaflets which are jargon riddled and
frankly, to the unsuspecting member of the public, meaningless.
This is the bedrock from which complaints and disputes often arise.
4. How should
they
be handled?
I used seven case examples at the conference to demonstrate the
sorts of issues that arise and perhaps how best to deal with them.
They consisted of a clear case of delay in responding to a
request for a transfer value; a misquoted early retirement pension
where the member had actually retired; a similar error where the
member had not yet left employment (and could, if he so
wished, cancel the arrangement and stay on at work); an elderly man
who was advised of a large over-payment of his pension and was asked
to repay it; a woman who was given too much by way of a tax-free
lump sum (PCLS); a woman whose claim for an ill-health pension in
relation to an incapacity caused by ME was rejected out of hand and
without explanation; and finally the payment of a large lump sum
death benefit which was later challenged by a hitherto unknown
surviving relative.
Some meaty examples, I think most people would agree, from which
we were able to draw the following conclusions:
- Trustees have a fiduciary responsibility to pay the correct benefits
in accordance with the Trust Deed
and Rules
- Delays and mistakes can only lead
to compensation if they have been
a direct cause of financial loss
- The member cannot expect
compensation if he/she should
have realised that the payment or
information given was incorrect
- The member has a responsibility
to try to mitigate his/her loss
- Generally speaking, incorrectly
paid payments are recoverable but
can be set aside on a defence of
‘change of position’.
5. When and how should
complainants be
compensated?
As a general principle, if a person has been on the receiving end
of some act of maladministration – using the term in its widest
sense – and has suffered some financial loss as a consequence,
he/she should be compensated accordingly. ‘Distress and
inconvenience’ awards of a relatively small amount can and should
also be made where appropriate, either additionally or where there
has been no actual financial loss incurred by the member.
6. Who is to
blame
and who should carry
the can?
In overall terms, the trustees are responsible for the running of
the pension scheme and all aspects associated with it. They must
therefore accept responsibility when things go wrong and arrange for
them to be put right in whatever way is appropriate. They in turn,
however, are entitled to look for recompense from the party directly
responsible for the error or delay which could, on occasion, mean
the employer (wages or HR departments) or the third party
administrators.
Finally, right at the end of the conference there was one very
amusing incident which came a little out of the blue. I had told a
story in my session about one of the serial complainers I had had to
deal with – a woman called Mrs Bradley. This was a woman who
repeatedly rang our helpline, and ultimately me personally, to
harangue us about her pension. It was impossible to understand
and/or help her with her “problem” because it was difficult to get a
word in due to the torrent of vitriol and abuse emitting from her.
Eventually we had to tell her we couldn’t deal with her over the
phone. She then proceeded to ring in using false names until her
tone and manner betrayed her and we had to terminate the call.
Eventually after many weeks the calls stopped and we all breathed a
collective sigh of relief.
In the wrap-up to the conference a gentleman in the audience
said he had really enjoyed the conference and was particularly
grateful to me for giving him such useful information which he would
be pursuing when he got home later that day. He said he had been
concerned for some time about the size of his phone bills and now
intended to look further into them. When asked, he said his name
was... (wait for it)... Mr Bradley!
Was he really the husband of the Mrs Bradley? I doubt it but it
was a great ending to a great conference
Malcolm McLean OBE
Consultant, Barnett Waddingham
01494 788100
malcolm.mclean@barnettwaddingham.co.uk
www.barnett-waddingham.co.uk
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