APTi Conference 2011

The Role of the Pensions Ombudsman

Paul Kenny

Why is there a Pensions Ombudsman?

• The Pensions Act, 1990, was the first attempt to regulate the conduct of Occupational Pension Schemes

• Pensions Board set up as the Regulator• Criminal offences created• Extensive powers of investigation into “state and

conduct” (S.18)• Can Prosecute offences under the Act

Why is there a Pensions Ombudsman? -2

• To fill a gap in the Pensions Act: Board can investigate, prosecute, but not order redress:

• In 2002, Office of the Pensions Ombudsman established (Pensions Amendment Act, 2002)– To investigate complaints of maladministration in

relation to pension schemes and PRSAs– To award redress in case of financial loss– To decide matters of fact or law

• Maladministration and non-compliance are not always the same thing

The Legal Position

• Determinations are binding on all parties

• Can be enforced by Order of the Circuit Court- on the application of the Complainant or of the

Pensions Ombudsman*

• May be appealed to the High Court within 21 days

• PO can prosecute for failure to provide information &c.Enforcement Orders also possible in these cases

*Minister SFA pre-March 2010

Who Can Complain?• an actual or potential beneficiary

– a member or a former member– a surviving dependant– a person claiming to be a member or a

surviving dependant – a contributor to a PRSA– a personal representative of a member or

contributor– a widow or widower of a member or contributor – If a person cannot act for themselves, a

representative may make the complaint– No charge to complainants

Against Whom?

• Former / trustee• Former / employer• Former / PRSA provider• Other category “to be prescribed”

– That means Regulations – Statutory Instrument

• Regulations: “Administrator” includes persons

• Providing administration service• To whom S.59 duties delegated• Interpreting or applying scheme rules• To whom PRSA provider has delegated

Time Limits

• If event complained of occurred before “Appointment Day” (28 April, 2003),time limit is six years back from date of signature of 2002 Act* – i.e., 13 April 1996.

• If post- Appointment Day, either – Six years from the date of the event, or– Three years from the date complainant knew or ought

to have known….

*Pensions (Amendment) Act 2002

This is being tested…• Complaint regarding failure to pay benefits• Benefit vested (Leaving through no fault)

many years ago• Benefits surrendered by ER/Trustee in

March 1996• PO has taken the view that “action” in this

case is failure to pay the benefits when they fell due under the rules – ongoing trustee duty, not discharged

• Trustee has appealed - Judgment awaited

Before a Complaint is Taken• Internal Disputes Resolution• Complaint in writing

•To trustees (Occupational Pension Scheme and Trust RAC)

•To Minister (Public Authority)•To Provider (PRSA)

Unless……• Dispute or complaint already subject to

investigation by the Board– Which certifies– “completed or terminated…………”

• Scheme in Winding Up• Frozen Scheme with no Employer trading• From 2006, if PO thinks it appropriate to waive –

this option is available only in the private sector

Exhaustion of IDR

• After three-month deadline has passed, PO may consider the IDR process to be “exhausted within its terms”, and proceed to investigation

• Also applies to the Public Authority schemes

Complaint Considered by “Appropriate Person”

• Notice of Determination in writing•Conditions to be met

– WHAT HAS BEEN DECIDED…. – WHAT IS RELIED UPON IN DECIDING….– THAT COMPLAINANT IS NOT BOUND…..– BUT CAN TAKE THE PROBLEM ONWARDS

Structure of IDR

Considerations in Ireland:• Simple• User-friendly• Saving time• Trustees can decide structure of IDR

procedure appropriate to scheme - size, circumstances

• IDR result not binding on the complainant

Practice Varies• Some schemes have good and established IDR

processes –e.g.,– Expert adjudicator recommends solution– Committee considers and recommends

• If not, advice is available• IR machinery may not be suitable for Pensions • Trustees and HR people need to understand IDR

requirement may not suit established “Grievance Procedures”

• Employment grievance procedures not open to ex-employees, pensioners, dependants

Public sector

• Would prefer not to be mixed up with this• Traditionally appeals take time – 3 month

limit!• Local expertise may be absent

– Or people don’t want to know• Appeals procedures not defined; e.g.,

– S. 11(5) “…may appeal to the Minister…..”– Information sometimes not readily available

(though required by Disclosure Regulations)

Failure to Operate IDR

• Breach of the Pensions Act• Criminal Offence• But sanction on employer / trustee does not give

redress to the complainant• PO now has discretion after the expiry of three-

month deadline“to deem the process to be exhausted within its terms”

When a complaint is received…

• Preliminary Examination– Is IDR required or to be waived?– Is the complaint within terms of reference?– If not: divert to DSFA, FSO, Pensions Board,

Financial Regulator, Equality Tribunal• MOUs

– If within jurisdiction, can the problem be solved quickly – intervention, mediation, even explanation?

Powers• To Summon witnesses• To require production of documents• Powers and privileges of the High Court

– Witness immunities and privileges– Statement/admission not admissible in criminal proceedings

• To state a case to the High Court• To make report on investigation

– Absolute privilege in Defamation

• To decide on Jurisdiction• To exchange information with Board and Revenue

Commissioners

Investigations• Respondents notified• Papers copied to all known to be involved

– Invited to name anyone with an interest

• Investigators follow up• Oral Hearings possible – complainants

often request them but they are seldom granted in practice - usually what they actually want is a meeting

Oral hearings• Evidence under oath• May be held in public• Not often used – Usual conditions:

– Dispute of fact not solved from the papers

– Person’s good name at stake– Conflict of evidence – veracity of

witnesses• These conditions are published on

the Website

Determination

• Pensions Ombudsman may give Preliminary View– Time allowed for parties to respond to this

• PO makes Determination• Final and binding – can be enforced by

Circuit Court Order• Appeal to the High Court within 21 days

Other Matters

• Jurisdiction may overlap with that of Pensions Board, Financial Services Ombudsman, Financial Regulator, Equality Tribunal

• Memoranda of Understanding with FSO, Board, Regulator, Revenue Commissioners, ODCE

• MoU with UK Pensions Ombudsman – joint jurisdiction

Other Matters, cont’d

• Staff are Civil Servants in the Service of the State

• Overall cost €1Million p.a.

Main Types of Complaint• OTOR:

– Referral to Ombudsman, Regulator, or out of time

• Failure to remit contributions (106 - + 49%)• Calculation of Benefits: (104 - -8%)• Fund values (34 – -59%)• Problems with Winding-up (22 - +57%)• Purchase of added years (public sector) (44 - n/c)• Disclosure of information (25 - -49%)• Failure to grant early retirement – solvency issues

and ill health (37 – n/c)Overall 2010 down 25%; 2009 up 71%; 2008 up 49%

Compliance with Pensions Act

• Most trustees and employers comply with most of the Act

• Most Common failure is in disclosure of information• Worst failure is in remittance of contributions

– S. 58A requires employers to remit all contributions (DC) or employee contributions (DB) within 21 days of month end

– Confirm remittance, e.g., on payslip– Extra disclosure in new Regulations

• Theft of contributions

Disclosure of Information

• Many complaints lie in failure of communication• Merely to adhere to the Disclosure

Requirements does not represent high quality communication

• Quantity -v- Quality• Regulation and supervision – small print

– Legally correct but incomprehensible– What’s wrong with using English?

Not all complaints are serious– Not pensioned on all of his service – shortfall in

benefits• Misinformation on transferred service – overstated by 100

days - “loss” was €3.38 per fortnight

• PO cannot compensate for loss of expectation

– Civil servant missing pension credit for ONE day of his service

• It was a strike day

– One man complained that trustees hadn’t told him inflation would erode the value of his pension

– Complainant insisted on being paid by cheque, then complained compensation for EFT not included in pensionable pay

Reporting

• Reports are absolutely privileged• Annual Reports and Digest of cases

– Protection of identities– Name and shame?– If Complainant goes public….

• Prosecutions for non-production of information– Criminal sanctions

• Applications for enforcement of discovery

Legal Proceedings• Apart from appeals and JR, prosecutions in the

District Court for failure to comply with requirement for information– 9 convictions in 2010– Fines €200-3500; costs €1300- 2300– One under appeal to Circuit Court

• Power of Enforcement– Primary enforcer should be the Complainant– Application to circuit Court– Minister’s Power to apply now given to PO

• Office of the Pensions Ombudsman36 Upper Mount St, Dublin 2

• 01 647 1650

• 01 676 9577

• www.pensionsombudsman.ie

• info@pensionsombudsman.ie