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23 Oct 07: Speech by Pensions Ombudsman at launch of Annual Report for 2006

A Aire, a dhaoine uaisle: Tá áthas mór orm fáilte a chur romhaibh go léir inniu. Ba maith liom buíochas a ghabháil leatsa, a Aire, as teacht annseo chun an Tuarascáil Bhliantúil a láinséail ar mo shon. ‘Sí 2006 an tríú bhliain iomlán ina raibh m’oifig-se i mbun oibre, agus is cúis áthais dom an tuarascáil seo a chur os do chomhair, atá cheana féin os comhair an Oireachtais. Minister, ladies and gentlemen: it gives me great pleasure to welcome you to the launch of the Annual Report for 2006, the third full year of operation of my office. I am grateful to you, Minister, for taking time out from your busy schedule to be with us today, to perform your first official function for my Office since your appointment as Minister for Social and Family Affairs. I wish to say that I and my staff value the support that your Department has always given us since the office was founded in 2003. Since the publication of my last Annual Report, we’ve had our ups and downs. There was quite a bit of movement on the staff side. I would like to thank and pay tribute to the work of Ger Hughes, Martina Brennan and Michelle O’Keefe and, of course Jean O’Toole, our office manager who did so much to help to set up the office. At the same time, I welcome to our staff Ciaran Creagh, John Sheehan, Joe Dempsey, Darina Breen and Niall Fallon. One by-product of all the movement was a lengthening case list. I am happy to say that, although complaints are now coming in faster than they were a year ago, we have managed to cut our average turnaround times. That couldn’t have happened without the dedication of Kevin Lonergan, Joan Bray and Caitriona Collins, who have been with me since 2003. Trade was quite brisk again in the past year The overall number of new complaints received was 439, up about 13% on 2005. We had carried forward 291 into 2006. We closed 307 during the year and finished up with 423 going forward into 2007. To the end of September this year, the total of new files opened is 369, an increase of 10% on last year. But the number of files closed is up by 85%, at 383 this year so far. We had 3088 telephone enquiries last year. To the end of September this year, 2517 were received – about 8% up on the same period last year. That puts us on target for about 3400 this year. In 2006, 61 determinations were made (and 32 complaints were upheld in full or in part). That’s down on the previous year, although the percentage upheld has increased quite a bit – from 32% to 52%. In addition to that, we settled 117 cases by mediation, and 75% of these went in favour of the complainant. Overall then the success rate of complainants improved considerably during the year from about 53% last year, to 67% this year. It’s hard to tell why this is the case – perhaps some of the complaints we received in earlier years were problems of long standing, where complainants had refused over the years to accept that that they had no case, but brought them to us anyway. Not all successful cases involve compensation, or money changing hands. Sometimes, an apology, or a piece of information, is enough to settle a complaint. Apart from the settled and mediated cases, 62 were concluded with general advice given, one was not proceeded with and 56 were discovered after examination to be outside our terms of reference for one reason or another. 10 complainants were referred for internal disputes resolution, and never heard from again. That’s not to say some of them won’t resurface in the future. Cases outside my jurisdiction were referred to the Department of Social and Family Affairs, the Pensions Board or the Financial Services Ombudsman, as appropriate. I would like here to record my appreciation of the very close co-operation we receive from all of these bodies. A Memorandum of Understanding was signed during the year with the Pension Board, to complement the one already in place with the Financial Services Ombudsman and the Financial Regulator. I would also like to record, in his absence, the co-operation of Clive Slattery and his team in the Revenue Commissioners, and of your own staff, Minister. Social Welfare records are a valuable asset to us in many of our investigations. We have power under the Act to obtain these and we value the speedy response given by your staff to our requests. Last year I mentioned the hope I had of bringing in a new case management system. This was the victim of Murphy’s Law – we were so busy with our cases that we hadn’t the time required to draw up tender documents and do all the other housekeeping that surrounds this project. I am happy to say that the project is now well in hand and the new system should be up and running by the end of 2007. I have always maintained that we need to learn from what happens in our dealings with complaints and disputes. I am pleased to say that some of what we learned has been translated into changes to the Pensions Act and the Regulations. I have complained in the past about delays in completing Internal Disputes Resolution, which is needed before I can take a complaint for investigation. Now the process can be deemed exhausted if it is not completed on time. It can also be waived completely if circumstances justify this – but not in Public Authority schemes. In the past I have complained about the lack of urgency in some public sector areas in dealing with problems. That has improved in some instances but unfortunately, the health service continues to be a huge area of difficulty – and one where a significant number of complaints are brought. Many of these relate to the cost of buying back service that was previously non-pensionable, because it was part-time or temporary. My concern has been to see that members were not unfairly overcharged because of lengthy administrative delays. In some cases I am afraid that people who are very close to retirement age when they finally get to pay for their back service may lose out on tax relief – for which I can’t compensate them. Some superannuation sections are simply not well resourced, and this results in the neglect of the internal customer – very often, front-line staff with patients to look after and no time to follow up on their pension problems. They deserve better. Part of the problem is that service is calculated in years and days – and very often it is broken service, spread over a number of years. I wonder what good purpose is served by spending huge amounts of time calculating entitlements with minute accuracy, just to make sure someone doesn’t get a few cents more than they are strictly entitled to? You will be aware, Minister, that I have particular issues about the operation of Internal disputes resolution in the Public Sector generally. These schemes contain a statutory right to appeal to a Minister or Ministers. Our experience is that the three-month deadline prescribed by the Pensions Act for completing this process is not being honoured in some parts of the public service. Delay is no help to anyone. We need to find some way of instilling a sense of urgency in those who are charged with handling these appeals on behalf of Ministers. I defended last year my policy of not naming those involved in complaints. My main concern here is to protect the privacy of the individual who complains. One category which will be named are those against whom enforcement orders will be sought. This is where my determinations have not been complied with. We now have Rules of Court concerning applications to the Circuit Court for enforcement orders, and we should see applications for several of these in the near future. In addition we have a few respondents whose conduct is so outrageous that, when the cases are determined, I will report on them specially, as they ought to be named and shamed. In my report I have welcomed the introduction of civil penalties for breaches of the Pensions Act, and the increases in penalties for breaches of the Act. The civil penalties regime is now in operation and I can assure the Pensions Board that this Office will co-operate fully with them in their efforts to secure compliance with the Act. I am please also to say that Rules of Court now exist for appeals against my determinations. There have been three appeals so far, all dating from before the Rules of Court. In one of them an important point of law has been decided as a preliminary issue. One was heard and my determination was upheld in part – but unfortunately, a very important point of law wasn’t decided in that process. The third appeal still hasn’t gone to hearing. Every year I mention the Construction Workers Pension scheme as one of my best customers. That hasn’t changed. There are still depressing numbers of complaints about the failure of employers to register members or to pay contributions; and, worst of all, the theft by employers of contributions that have been deducted and not remitted to the pension scheme. I am pleased to say that we have been able to recover significant amounts of money for employees who have been disgracefully treated by their employer. However, in a small number of cases, there is nothing we can do – the employer has ceased to trade, gone out of business, and we can’t recover the money. Even the limited protection given by the Insolvency law is missing in many of these cases, as very often, no liquidator is appointed to these companies. Every year I mention the problem of the large numbers of allegedly self-employed workers in the construction industry. I believe that steps are being taken to tackle this problem. Every year I mention the need to clarify the position of companies which describe themselves as employment agencies, but so far nothing has been done. I am pleased to say that something has been done about Income Continuance Plans – prolonged disability insurance. Following legal advice, my colleague, Joe Meade, is able to deal with a great many of these complaints. For the past few years I have been banging on about temporary immigrants, and how I believe they should be allowed to export the little bit of capital that is their pension savings when they return permanently to their own countries. I will be making detailed representations about this – among other things - in the context of last week’s Green Paper. Recent Press reports have characterised the consultation process as away of postponing action. I don’t agree. All the discussion that has gone on previously has not produced consensus or a sense of direction. I hope everyone who cares about retirement provision will take the opportunity that the Green Paper presents to air their views, their wisdom and even their prejudices, and take the consultation process seriously. Far too many people stay silent when they have an opportunity to speak, and then complain afterwards that the wrong thing was done. I have written a good deal in this report about the design of pension schemes. A lot has been written about the demise of defined benefit schemes, the emergence of all kinds of hybrid arrangements, and the adequacy or otherwise of contribution levels to defined contribution schemes. I am concerned with technical flaws in design that produce bad results for the member. Schemes where the cost of death and sometimes disability benefits are a first charge on fixed contributions. If these are not carefully watched, there is a danger – and it certainly does happen – that the cost of these benefits will erode pension savings as members get older and insurance gets more expensive. There are schemes set up as Target benefit schemes – no promise, but a general undertaking to give the member an approximate benefit at retirement. If these are not kept under careful review, they can be very dangerous, as market conditions, life expectancy and so on, change over the years. Pension professionals involved in these cases need to be extremely careful about what they sell – and about after-sales service as well. That said, I must also recognise that there is very great number of scheme members and their dependants who are paid their benefits, as they become due and in the amounts that are due. It wouldn’t do to get complacent about it, but far more is done right in this industry than is done wrong. In conclusion, Minister, I wish to thank you and the senior staff of your Department – in particular, the Secretary General, Bernadette Lacey and her predecessor, John Hynes, Alice O’Flynn, Anne Vaughan, who has moved to An Taoiseach, her successor Orlaigh Quinn, Paul Cunningham, Finbarr Hickey and Dave Keogh , as well as staff in Accounts, Facilities Management, Personnel and IS Services – for the invaluable support that I have received since this Office was established and that I continue to receive in its ongoing operation. I believe it is money well spent. And lastly, I also wish to thank my most valuable asset - my own staff. I wish to record my own appreciation of their hard work, their patience, their commitment, their multi-tasking ability – and the support they give me and to the complainants who come to this office, looking for someone to right a wrong, real or imagined, or just seeking a sympathetic ear to share their pension problems.