LIA The Role of the Pensions Ombudsman Paul Kenny 25 November 2010.

LIA

The Role of the Pensions Ombudsman

Paul Kenny25 November 2010

What is an Ombudsman?

ombudsman (plural ombudsmen)• An appointed official whose duty is to investigate

complaints, generally on behalf of individuals such as consumers or taxpayers, against institutions such as companies and government departments.

• A designated internal mediator in an organization whose duty is to assist members with conflict resolution and other problems and to serve as independent consultant to recommend changes to policies or procedures to improve organization effectiveness and efficiency.

- Wiktionary

Less Formality

• An Ombudsman is able to investigate and determine complaints with greater speed and flexibility and with less formality than would be the case with the Courts

• The Ombudsman service should be available free of charge to the consumer /taxpayer /customer

Why is there a Pensions Ombudsman?

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

• Pensions (Amendment) Act 2002Pensions Ombudsman office established– To investigate complaints of maladministration in relation to

pension schemes, PRSAs and “Trust RACs” (group self-employed arrangements)

– To award redress in case of financial loss– To decide matters of fact or law

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

The legal angle

• 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

*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

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

* SI No 397 of 2003

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….

Whichever is the later

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 –

Regulations amended - this option is available only in the private sector

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

Time Scale

• “Relevant Person” – i.e., Trustees, Minister or PRSA Provider has

• Three Months from receipt of all necessary information, to furnish

• Notice of Determination

What Happens in Practice?

• Complainants Don’t know about IDR– Write to the Ombudsman– Told about IDR and possible exceptions– Apply for IDR ……………..

• Do the trustees know about IDR?• Who’s the consultant?• Is there a consultant?

– WE WILL WRITE TO THE TRUSTEES

And send them our booklet…..

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?

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• 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

Persistent ComplainantsOften my office is the last resort - all other avenues exhausted“Forum Shopping” doesn’t work

“Querulous Paranoia”

Sources of Complaints

• Public Sector, 47%– But some may be generic

• Private Sector, 53%• PRSAs – 2• Total complaints, 2004: 298.• 2005: 389 (+31%)• 2006: 439 (+13%)• 2007: 515 (+17%)• 2008: 758 (+47%)• 2009: 1760 (+71%)• 2010: Down about 25%

Main Types of Complaint

• OTOR:– Referral to Ombudsman, Regulator, or out of time

• Post-retirement increases / Parity• Failure of scheme to respond• Membership/Entry Conditions• Calculation of Benefits:• Failure to remit contributions• Failure to Include in scheme• Failure to grant early retirement – solvency issues

What We Have Learned

• Public Service Admin is uneven– Some Departments centralise, some don’t

• Loss of expertise

• Reluctance of people to stay in Superannuation Section– Promotional criteria a problem here

• Specialist Staff means fewer problems– Need for recognition

What we have learned, continued• Investment – “proper investment”• Disinvestment of AVCs and DC in winding-up

– Can the trustee ever be right?

• Amalgamation of (DC) AVCs with DB fund• A considered decision, or just laziness?

• “Having regard to the nature and duration of the liabilities” is just a new way of saying something very old:

“The duty of a trustee is not to take such care only as a prudent man would take if he had only himself to consider; the duty rather is to take such care as an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally

bound to provide”. Learoyd -v- Whiteley, 1887

Investment and the member• Many don’t know (or forget) how their

money is invested• They should be reminded

– Option statements – Annual Benefit statements?– Communications re winding-up

• Is it enough to name the fund, or should we be more specific?

• Do some employers/trustees offer too narrow a range of options?– Is “Lifestying” universally available?

Other Problems• Failure to wind up promptly

• AVCs not administered with main scheme benefits

• Public service AVCS – pensionable -v- actual service

• Early Retirement – ill health and normal– Deferred beneficiaries given options

previously– Last-minute AVCs now locked in

Not all complaints are serious- to start with

• Some should never get to my office, but escalate due to– Poor communication – both ways– Lack of knowledge of trustee duties– Failure to take complaint seriously

• And some were never serious in the first place– Failure to switch investment in less than 5 days

• Thursday to Monday!!

– The Great PO Robber

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?

Reporting, Legal Proceedings

• 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• Power to Enforce Determinations

Questions?