The Pensions Ombudsman has published his latest annual report for the year 2019/2020. The newly structured Ombudsman is making fewer formal determinations and more complaints are being dealt with by the Early Resolution Service (ERS).

The annual report 2019/2020

The headlines

As we noted in July's 'The Month in Pensions', some of the big "take home" points from this year's annual report are as follows:

  • informal resolutions have risen to 95% in 2019/20 compared to 80% the previous year;
  • full scale investigations are reducing (from 1,528 in 2018/19 to 1,192 in 2019/20), in line with expectations from the introduction of the early resolution procedure; and
  • telephone enquiries have increased year-on-year by 41% to 11,522 and written enquiries by 24% to 8,977.

Those were the more widely reported headlines but a closer look at the report reveals some other interesting facts.

Other interesting facts

  • Although the overall number of queries/complaints arriving with TPO is going up, the effect of more informal resolutions is that TPO himself is only looking at 5% of the total completed investigations that come to his office.
  • TPO does not uphold the majority of complaints that come to him for determination (this is no change from last year). Only a small percentage of just over 10% are upheld by TPO and 18.7% are partly upheld.
  • The reduction in TPO's workload has meant that there is currently no plan to replace the Deputy Pensions Ombudsman Karen Johnston.

Is TPO's experience your experience?

How long are investigations taking?

The report says:

  • Early resolution investigations - 3.9 months (starts running from when the parties consent to investigation).
  • New adjudication investigations - 5.3 months (starts running from when TPO has enough information to assess jurisdiction).

How does this compare with your scheme's experience?

We are aware that some investigations last longer than the timescales given above and they can take significantly longer in complex cases where a number of parties are involved. Where you are concerned about timescales, we recommend contacting the assigned caseworker/adjudicator in the first instance to see if they can allay any timing concerns.

The top ten causes for complaint in 2019/20

No. Complaint type % of investigations for year 2019/2020 % of investigations for year 2018/2019 and position in top ten
1 Transfers 23.6 11.24 (2nd)
2 Misquote

14.1

 8.49 (4th)
3 Ill-health 9.8 8.41 (5th)
4 Administration 9.1 4.64 (8th)
5 Retirement benefits 8.2 -
6 Contributions 7.3 2.59 (10th)
7 SIPP/SSAS 3.5 -
8 Membership 3.4 -
9 Death benefits 3.2 5.50 (7th)
10 Overpayments 2.9% 3.38% (9th)

A dash (-) means this type of complaint did not feature in the top 10 closed investigations in the previous year's in the Annual Report. The other types of complaint which featured in the 2018/2019 top 10 (but did not feature in the 2019/2020 top 10) were:

  • Failure to provide information/act on instructions (13.92% in 1st place),
  • Benefits: incorrect calculation (10.34% in 3rd place), and
  • Benefits/failure to pay or late payment (5.74% in 6th place).

How does this compare with your scheme's experience? The themes TPO identifies are consistent with the cases we have seen over the past 12 months.

The coming year

In his introductory cover note, Anthony Arter states that his office is "prepared for a potential increase in the number of complaints received. This will include those relating to the furlough scheme, scams and transfers, payment of auto-enrolment contributions, pension benefit claims concerning ill-health and redundancy and delays in providing information and processing requests".

Is this your scheme's experience? Whilst we are seeing more complaints being made now, most are in the delay/processing space currently but we share TPO's view that events of the past few months have the potential to raise a wider variety and volume of cases in the coming year.

Early resolution ("ERS") versus adjudication

One of the key changes which has led to the reduction in the number of fully fledged Pensions Ombudsman complaints has been the introduction of the ERS in April 2018. Although this service is offered by the office of TPO, it is distinctly different from the complaint, investigation and adjudication service for which TPO's office is traditionally known. It is born out of the move from TPAS to TPO's office.

The Annual Report demonstrates the large number of pensions complaints that are being referred to the ERS, having been through the initial filtration of the First Contact team. Of some 5,698 applications with a potential pensions complaint, 3,055 were referred to the ERS and 2,643 were assessed as potential adjudication investigations.

Of the cases assessed as potential adjudication investigations, 411 of these were declined for investigation on the grounds that they were:

  • Not made in time - 48%
  • Not raised with the parties - 23%
  • Excluded from TPO's jurisdiction - 6%

It is interesting to note that nearly half of the complaints that were declined for investigation were declined on the basis that they were out of time.

TPO's stated objective is to improve the customer journey by providing one point of contact for the resolution of complaint. This year's report offers statistical evidence that the ERS has cut down the number of complaints going all the way to full determination. On the face of it, that is positive.

Implications of ERS for schemes and sponsors?

However, while it is helpful for pension scheme members to have access to an advisory service before they have even engaged in the IDR, it remains to be seen whether the change has been received as well with pension schemes.

The unintended effect of TPO's intervention at such an early stage can be a front end-loading in the time and cost of dealing with complaints or what may even be merely pensions queries. The questions from the ERS still come from TPO's office, on its letterhead. In some cases, this may result in members' expectations being raised before the IDR process has been pursued to its natural conclusion. Moreover, early judgements on the merits of the case may be formed before the facts giving rise to the complaint have been fully investigated by the parties themselves. This makes early and quick assessment of the risks and any wider implications of a member complaint or query very important so that, in appropriate cases, necessary investigative work is carried out to set the right context for the TPO's enquiries.