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21 Feb 08: Presentation to the Oireachtas Joint Committee on Social and Family Affairs

The Role and Functions of the Pensions Ombudsman

A Chathaoirligh, Members of the Committee:
I am grateful to the Joint Committee for this opportunity to address you on the role and functions of the office of Pensions Ombudsman.
The Office was established in April 2003, under the terms of Part XI of the Pensions Act 1990, as added by the Pensions (Amendment) Act 2002, and the Statutory Instruments to enable me to begin my investigation work were signed on 2 September 2003.
The purpose of the Office is to investigate and decide complaints and disputes concerning occupational pension schemes (that is, pension schemes sponsored by an employer) and Personal Retirement Savings Accounts (PRSAs). The office is a statutory position and I am completely independent of the Minister for Social and Family Affairs in the performance of the duties of my Office and I act as an impartial adjudicator. I can investigates pension schemes in both the public and the private sectors, and my role has recently been expanded to include certain group schemes set up under trust for bodies comprising self-employed people.
Although I am independent of the Minister, the Department of Social & Family Affairs provides me with very valuable support – taking care of personnel, payroll and accounts payable functions, supporting my information technology, and so on. I do, of course, produce my own Annual Report and my Accounts are audited by the Comptroller and Auditor General.
I am assisted by nine experienced and well qualified staff, who are all Civil Servants in the service of the State. They have authority to act on my behalf; though the final decision on any complaint – formally known as a Determination - must be made by me. There is no charge to members of the public for bringing a complaint or dispute to my office.
The Pensions Ombudsman can investigate:

  1. complaints made by or on behalf of an actual or potential beneficiary of an occupational pension scheme or PRSA, who alleges that he or she has suffered financial loss because of an act of maladministration by or on behalf of a person responsible for the management of the pension scheme or PRSA. The complaint may be against trustees, managers, employers, former employers or administrators (including PRSA providers).
  2. disputes of fact or law in relation to an occupational pension scheme or PRSA.
    What is maladministration? Maladministration is hard to define. It can include bias, neglect, inattention, delay, incompetence, ineptitude, perversity and arbitrariness. It can cover many kinds of activities. It means administration that is poor, or that has failed in some way. It can be something that was done, or something that was not done – if someone fails to do something they should have done, or doesn’t do it properly, or does something they should not have done.

It can include:

  • irregularities or mistakes in the administration process;
  • discrimination or unfairness;
  • failure to understand, interpret or properly operate the rules of a scheme;
  • failure to honour the terms of a PRSA contract;
  • unnecessary delay in making payments or giving information;
  • abuse of power;
  • not providing sufficient information, or not giving clear information;
  • neglecting to obtain the proper information needed to exercise a power;
  • Failure to get advice – or failure to ask advice of the proper person.

This is not a complete list by any means, and many different kinds of action or failure can be classed as maladministration. However it is important to note that, just because a person does not agree with a decision that has been made by the trustees or administrator of a scheme, or with an action that has been taken by them, it does not necessarily mean that there has been maladministration. To make a complaint there must be good reason to believe that the decision was not properly made or implemented, or that the action taken was somehow wrong or unfair. For redress to be made, a financial loss must have resulted from whatever occurred.
If a person has sustained a financial loss as a result of maladministration, I can award redress, up to amount of the loss of scheme benefit. I don’t have power to make awards for pain and suffering, inconvenience, or legal costs that they may have incurred. In spite of that, it sometimes happens in the course of resolving a dispute that some compensation may be offered by the person responsible for the problem. However, if a person has incurred substantial costs before approaching my office, their only means of recovering these may be through the Courts.
Disputes of fact or law usually arise as part of a complaint of maladministration, without needing a separate investigation. Whether a complaint involves maladministration or a dispute of fact or law is for the Pensions Ombudsman to decide. For example, in one case I had to decide -as a matter of fact - whether a person had been constructively dismissed, because it impacted on her right to a preserved pension benefit if she had been.
It may be that an individual is not certain whether the complaint they have is one that the Pensions Ombudsman can investigate. Sometimes people can be confused as to what has happened, or who may be responsible for it. On examination, a complaint may, for example, properly belong to the Financial Services Ombudsman, to the Pensions Board or to the Financial Regulator. There are Memoranda of Understanding in place between the bodies so that, when we examine a complaint and decide that it properly belongs elsewhere, we can ensure that it gets to the right place, so the consumer is not left high and dry. The same is true of Social Welfare pension queries, which we get fairly often, and routinely pass on to the appropriate people in the Department.
Preliminary examination of cases which turn out to be outside our terms of reference is often quite time-consuming. The Pensions Ombudsman cannot investigate a complaint or dispute where court action has already begun – unless the action is “stayed” by the court, which can be done if the case has not gone very far – i.e., before pleadings are entered.
Disputes and complaints that are outside my remit include those relating to compliance with the requirements of the Revenue Commissioners or with the Pensions Act, or other issues concerned with the general running of a scheme. Matters of general compliance with the Pensions Act are the responsibility of the Pensions Board. The Board also has certain statutory powers reserved to it under the Act and equal treatment issues are in general the concern of the Equality Tribunal and are also excluded from my jurisdiction.
Although the Pensions Ombudsman cannot make any findings of fact about non-compliance with the Pensions Act or the matters that come under the statutory powers of the Pensions Board, it is possible that a complaint may involve both financial loss and failure by some person to comply with the Pensions Act. In such cases, both the Board and the Pensions Ombudsman may investigate the matter.
Those who are entitled to bring complaints to my office include a member of a pension scheme, any person who has been a member, any surviving dependant of a deceased member, any person claiming to be a member or a surviving dependant of a deceased member of a pension scheme or a Trust Retirement Annuity Contract, a contributor or former contributor to a PRSA, a personal representative of a deceased member or deceased contributor or a widow or widower of a deceased member or deceased contributor. Complaints can also be made by the personal representative, i.e. the person responsible for administering the estate, of a deceased member or contributor.
If the person eligible to make a complaint is under age 18, or is unable to act for himself/herself, then the complaint may be made by a relative or other suitable person.
The Joint Committee should be aware that time-limits apply for bringing a complaint or dispute. The matter must be referred to my office before the later of:

  • 6 years from the date of the act or event giving rise to the complaint or dispute or
  • 3 years from the date on which the complainant was aware – or ought to have been aware – of the problem.

However I may allow a longer period for accepting a complaint if it appears to me that there are reasonable grounds for extending the period and it would be just and reasonable to do so.
To put these time-limits into context, if the act or event complained of took place before the 28 April 2003 (the day I was appointed), the Pensions Ombudsman can investigate it, only if it took place within 6 years of the date on which the Pensions (Amendment) Act, 2002, was signed by the President, i.e. 13 April 2002 so I can look back to April 1996.
Finally, there is a general requirement in the legislation that, before I can accept a complaint or dispute for investigation, it must have been submitted for Internal Disputes Resolution (IDR) within the scheme. In the private sector this means a referral to the scheme trustees or the PRSA provider as the case may be. In the Public Service, with some exceptions, it is an appeal to the relevant Minister or Ministers. In certain cases in the private sector, I can allow the IDR process to be bypassed if I think something should be investigated, but there are good reasons why IDR is not appropriate. In addition, the IDR process cannot be used as a vehicle to drag out a dispute, as the Act allows three months for the pension scheme trustees, or the Minister/s as appropriate, to issue a “Notice of Determination”, which says what has been decided in the IDR process and what is relied upon in coming to that decision. The complainant may accept or reject this finding it does not bind them. If they then choose to refer it to me, I will investigate.
I have very wide powers of investigation, akin to those of a High Court judge in the taking of evidence under oath, and I can require any person to provide me with whatever information or documents I require for an investigation. When I make a final determination, it is binding on all parties, subject only to appeal to the High Court. Enforcement, if necessary, is through the Circuit Court.
Although I do make determinations, it is a fact that a great many disputes are actually solved through mediation between my office, the complainant and the scheme administrators. I regard this as a more satisfactory outcome generally, as it is usually a speedier process and opposing positions do not become entrenched. Overall, about 55-60% of decided cases go in favour of the complainant. Only a handful of determined cases have been appealed; none so far successfully. Quite a few complaints are actually solved by the IDR process and not proceeded with.
Since the office opened in 2003, I received 1796 complaints to the end of 2007 and the trend is very much towards an increasing workload each year. For example, in my first full year of operation, 2004, I received 297 cases, whereas last year the number was 515 – an increase of more than 70%. There have been steady increases in the numbers received every year. This is partly due to our own success in publicising the office and reminding people of the service that we provide; and partly due to the fact that pension schemes generally are going through some difficult times at present, whether in terms of the solvency of defined benefit schemes, or the poor investment performance being experienced by schemes generally. Interestingly, though, about 45% of all complaints are from areas of the Public Sector, where these pressures are largely absent.
I am pleased to say that, while we had some staffing problems over the past two years, these have now been overcome, and we made a big push and closed 584 files in 2007, an increase of 90% on the previous year. At present, we have 354 cases in hand. As well as conducting our investigations, we took nearly 3600 calls though the main switchboard and there were over 263,000 hits on our website in 2007.
A significant addition to the administrative support for my work took place at the beginning of last month, when our new electronic Case Management System went live. All cases dealt with by the Office are now logged and tracked electronically. This will speed up the administrative side of the operation and will allow us to track trends, and details of the sources and nature of complaints, more accurately that we have been able to do previously. This system was delivered on time and within budget.
It is hard to quantify the amounts that have been paid to complainants and their dependants as a result of our operations. The resolution of a complaint can amount to anything from a simple apology, offered and accepted, to awards of many thousands of Euro. One area which we have measured is the construction sector. This is our single biggest source of complaints. Since 2003, I have caused over one million Euro in unpaid contributions to be paid to the Construction Workers’ Pension Scheme, in amounts ranging from as little as €40 to as much as €18,000 for one individual, and have awarded more than €600,000 in mortality benefits to the dependants of deceased workers.
The total cost of the office for 2007 was just over 1 million Euro, though this would have been higher but for the fact that we had not got our full staff complement in place until early December. I believe that this represents good value for money. As members of the Committee will appreciate, pensions law can be particularly complex and it takes time for staff to become familiar with its intricacies. However, I am satisfied that my office is well placed to provide a high quality service to the public.
I have taken the liberty, Chairman, to provide members of the Committee with an information pack on the workings of my Office. I thank the Committee for the opportunity to make this presentation, and will be pleased to take any questions which you, Mr. Chairman, or the members of the Committee may have.