Search This Site

02 Dec 2009: Pensions Ombudsman launches 2008 Annual Report


Address by Paul Kenny, Pensions Ombudsman,
at the launch of his Annual Report and Digest of Cases for 2008
2nd December, 2009.
·          Massive 76% increase in complaints in 2009 (Para. 11)
·          16 court actions taken against builders in 2008 (Para. 7)
·            Shared Services arrangement essential for proper administration of public sector pensions (Paras 8 & 9)
·            Pension Scheme Administrators generally honest! (Para. 10)
·            Cost of Office of Pensions Ombudsman falling each year and now below 2007 level (Para. 12)




A Aire, a dhaoine uaisle:
1.         Ba mhaith liom buíochas a ghabáil leat-sa, a Aire, as bheith annseo linn inniu chun an Tuarascáil Bhliantúil a láinseáil ar mo shon. Gabhaim buíochas freisin as ucht an chúnaimh agus as na cabhrach a tugtar domsa agus do bhaill foirne uile na hoifige seo, ag muintir na Roinne Ghnóthaí Shóisiailigh agus Teaghlaigh. Go raibh míle maith agaibh go léir.
Minister, ladies and gentlemen:
2          I am very pleased to welcome you all here today for the launch of my Annual Report for 2008. At the outset I wish to put on record my thanks to the Minister for her unfailing support and, indeed, for re-appointing me as Pensions Ombudsman earlier this year. I also wish to acknowledge the help and support afforded to me and to my staff by the people in the Department of Social & Family Affairs. We truly could not function without that. In the areas of Payroll, Accounts Payable and IT services we really do benefit from a shared services type arrangement. The people in the Pensions Policy Unit, with whom we’re in regular contact, are an unfailing source of support.
3          During 2008 we received 758 new complaints, an increase of 47% over the previous year. We closed 639 files, an increase of some 9% over 2007. We started 2008 with 354 complaint files still open and we ended the year with 473 cases still on hand, an increase of 34%. While I was not happy to have so many cases still open at the end of 2008, many of our complaints are difficult and complex and not amenable to a quick fix solution. I take heart from the fact that the number of cases closed continues to increase and I will comment on this later.
4          As is my custom, my Annual Report draws attention to a number of issues that presented themselves during the year. In May of 2008 I presented a detailed submission on the Green Paper on Pensions to the Minister's Department and while I know that the economy has been turned on its head in the meantime- creating additional significant pressures for the Minister- I do know that her Department has not lost sight of the importance of dealing with a national pensions strategy. I do not propose to comment on my submission but it is available on my website for anyone who is interested.
5          Tragically, a great many people have lost their jobs in recent times and often find that their pensions are also under threat. Pension scheme members who have an entitlement to preserved benefits are not well served by regulation and we get a number of complaints from people who find it hard to get information about their preserved benefits. Trustees are not obliged to give regular updates to members with preserved benefits -- mainly, I believe, for reasons of cost. However, these members can help themselves. Ask for information, make sure you update scheme administrators with changes of address, and remember that you are still a member of the scheme, and that you’re entitled to ask for the trustee annual report, and for actuarial valuations in a defined benefit scheme.
6          An increasing number of complaints relate to the construction industry.  Employers have either failed to register employees with the Construction Workers Pension Scheme as required under Registered Employment Agreement, or have failed to make the appropriate contributions to the scheme. Even more worrying are cases where contributions have been deducted from wages but not remitted. The complaints tend to relate to smaller companies in the industry, and I know that some small contractors complain that they can’t get payments that are due to them from larger firms to which they were sub-contractors. Though many of the complaints relate to a time when the industry was going through a boom, with no excuse for not complying with pension obligations, I now find that such companies are either not financially capable of paying arrears, or have actually gone out of business. However, where I am presented with a case involving the deduction of contributions from wages without onward remittance to the pension scheme, and where it is clear that the directors of the company must have been aware of what was going on, I will seek to make them personally liable for the debt. Apart from the fact that deduction of contributions and failing to remit them is nothing short of theft, unpaid contributions in too many cases have meant that no benefits were available to families of building workers who have died, sometimes in tragic accidents in their own workplaces.
7          Again, it is mainly in dealing with complaints involving this industry that I find the need to exercise my powers through the courts and I was particularly busy in this regard in 2008. Last year my investigators appeared in District Courts 12 times and in Circuit Courts four times to advance prosecutions against companies who had failed to respond to my requests for documents or information, or to enforce compliance with these requests. I was successful in every single case, with the defendants receiving fines and/or criminal convictions. I was awarded costs and the information/documentation which I had initially requested was produced. I have details many of these cases on my website and I think that the message is getting through that it is easier – and cheaper - to comply with my requests in the first place. Only last week, I had a case before Kilkenny District Court where the defendant -- a builder -- was prosecuted for failure to produce documentation. I got the documentation and he was fined €3000 plus my costs.
8          Once again in my Annual Report I plead the case for a "shared services" approach to public service pensions administration, something that is urgently needed. Pensions have always been complicated, and are even more so nowadays. Despite an outward appearance of sameness, there are many twists and turns in the rules of different schemes in the State sector. The civil service, the education sector, local authority and HSE schemes can be a minefield. My reason for saying that shared services must happen is that I see, at first hand, the terribly uneven administration that occurs. It is simply not right that people of similar grades may get different pensions because of a different interpretation of the same scheme rules by local pension administrators in local authorities or the HSE. It takes years to acquire the knowledge to administer pensions skilfully – and fairly - in these areas. When the skills are missing, mistakes are made and people are dissatisfied. The result is a train of administrative reviews, often involving Government Departments and Ministers, and complaints eventually landing on my desk, whereupon I will begin a further examination. It would make great sense to establish and maintain a corps of skilled individuals to look after these areas and avoid the need to devote scarce resources to resolving  problems that really should not have arisen in the first place.
9          Within the Civil Service itself, some Departments have managed to concentrate pensions expertise in one area. In others, there seems to be little or no pensions knowledge – and it is simply not realistic to expect that the very smallest Departments can ever provide it. I know from the experience of this Office that where specialist pensions people are available, questions are answered, and explanations given, far more rapidly and accurately than where the expertise is missing, or dispersed, or some third party has to be consulted.  I do know that the Department of Finance is looking at this area and I wish them well in their task. If they need encouragement they need look no further than the Financial Shared Services facility established by the Department of Justice Equality and Law Reform some years ago, which provides financial accounting and payroll facilities to its own Department, to the Gardaí, the Prison Service, the Courts, the Property Registration Office, the Department of Arts, Sport and Tourism, the National Museum, the National library and to the Department of An Taoiseach.
10        The Digest of Cases that I issue each year with the Annual Report contains details of a number of cases that are representative of the sort of complaints I have received during the year. This publication is aimed at increasing the knowledge and learning of those involved in pensions. One unusual case documented this year relates to the misappropriation of pension scheme benefits by a professional administrator. The misappropriation did not result in any personal financial gain to the culprit but resulted from an attempt to cover up an earlier mistake. Following my investigation, the complainant was fully reimbursed and I directed that the administrator conduct a full systems audit to ensure that such misappropriation is unlikely to recur in the future. I also invited the administrator and the trustees to consider whether they had any obligation to report the matter to the Pensions Board, which I understand they did. To a certain extent I am heartened, in that this was the only case of its kind to come to my attention since I was first appointed, which suggests to me that governance and system controls within the industry are generally good.
11        Unfortunately the number of complaints to my Office continues to increase at a dramatic rate. While 2008 complaints showed an increase of 47% over 2007, the increase to end November of this year, i.e. Monday last, shows a further 76% increase over the same period in 2008. I fully recognise that the Minister cannot make additional resources available to me in these difficult times and so we must adapt our procedures and adopt new practices to increase efficiency. We have introduced a new Case Management System, for example – 2008 was the first full year of operation; we continually refine our examination and investigation techniques. We have recently installed Voice Recognition Software which has speeded up document production significantly. What is having a marked effect is an increased focus on mediating cases rather than having to go to formal Determination - in blunt terms, getting people to see sense. During 2008 some 50% of our cases were closed following general advice given or mediation by this Office. While there is a saving in not having to produce a legally binding Final Determination, the mediation/advice route does involve a time-consuming "hands on" approach. However, I am very pleased to note that despite the 76% increase in the number of complaints in 2009, we have fewer cases on hand right now than we had at the end of 2008, a notable increase in productivity. 
12        Remarkably, however, the cost of running my Office has actually reduced. In 2007, my Oireachtas Grant provided through the Department of Social and Family Affairs amounted to €1.058 million. This reduced to €961,000 in 2008 and I would expect that the outturn for this year will be lower again. Such caseload and financial results could only have been achieved through the dedication, commitment and skill of the team in my office, whom I am very happy publicly to congratulate and thank.
13        Before I finish, I would also like to record my thanks for the help and co-operation received from the Financial Services Ombudsman, the Pensions Board, the Financial Regulator, the Offices of the Ombudsman and the Director of Corporate Enforcement, as well as that of the various practitioners and benefit providers whom we have to approach in dealing with our complaints. It is much appreciated.
14        Finally, before presenting this Report formally to the Minister, I would like express my gratitude to you all for being with us here today. Go raibh míle maith agaibh go léir.