Bushra ChaudryTrustee Solutions

Pension Ombudsman Update

Bushra Chaudry

Audience Participation Time !

Risks

What % of Pension Ombudsman cases heard over the last three

years related to ill-health claims?A: 39.1%B: 47.8%C: 52%

Risks

The Pensions Ombudsman has recently criticised trustees and

employers for responding “insensitively” to claims.

A: TrueB: False

Risks

If trustees outsource the handling of complaints to a third party, such as

their administrator, who is responsible for how those complaints

are dealt with?A: TrusteeB: Third party (such as administrator)C: Sponsoring employer

Risks

Which of the following carries the most risk of an increase in Pension

Ombudsman claims?

A: Large scale redundancy exercise

B: Enhanced transfer value exercise

C: Pension increase exchange exercise

Identifying areas of risk

RISKS

Not understanding

your rules

Not applying your rules correctly

Large scale activities

Complaints handling

Confusion about

responsibility

RISKS

Not understanding

your rules

Not applying your rules correctly

Large scale activities

Complaints handling

Confusion about

responsibility

The process

• Application

• Investigation

• Resolution

Managing risk

A: Pay the benefit out as it is unreasonable to impose conditions on the payment of the death benefit once the trustees have exercised their discretion as regards the recipient(s).

 B: Continue to refuse to pay out the benefit until a signed discharge is

received from Mr McCoy as it is unreasonable to expect the trustees to expose themselves to the risk of future claims.

 C: Revisit the decision to pay the benefit to Mr McCoy and consider other

suitable recipients of the benefit under the scheme rules.

Managing risk

A: There is no need to take any action in this case because Mrs Dent’s complaint falls outside the three year limitation period for Pension Ombudsman claims.

 B: There is no need to take any action in this case because Mr Dent the

rules were considered and applied properly and Mr Dent received the correct ill-health benefit under the scheme.

 C: Mr Dent’s employer should have told him to speed up his application

so he could be considered for the more generous benefit. Mrs Dent should receive generous compensation equal to the difference in Mr Dent’s pension instalments, the difference in her widow’s pension and a payment for distress and inconvenience.

How to manage risk

• Watch out for risk triggers• Training (for trustees but also

for third party administrators)• Complaints handling process• Keep thorough audit

trails/evidence of reasoning• Awareness of current PO

approach• “Firm but fair” approach.

PO’s parting shots“She was receiving twice as much as she was due. It may well be that she did not identify it in fact, but if she was heedless, whatever the reason, the Scheme should not be liable in consequence.”

“Mrs McKinney was paid £300 to cover her non-financial loss. I do not accept her description of this figure as “insulting”, nor that she needed to return it.”

“The LGPS is by any measure a good quality pension scheme...it would be strange for a local government employee to decline to join it on the grounds of uncertainty about the method of indexation or revaluation. I see no evidence to suggest that Mr Frost addressed his mind to the issue of inflation-proofing when he decided as he did.”

Q&A

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