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19 December 2011: Pensions Ombudsman acknowledges that 2011 was another tough year for pensions.

Pensions Ombudsman acknowledges that 2011 was another tough year for pensions.

The Pensions Ombudsman, Paul Kenny, acknowledges that 2011 has been another tough year for pensions and investments and highlights the work done by his Office in assisting individuals in the resolution of their pension-related complaints.

The Pensions Ombudsman encourages the use of early intervention and mediation as a means of resolving disputes that are submitted to him.  Not every complaint has to go to Determination, and early intervention can sometimes help to prevent the escalation of a difficulty.

The Pensions Ombudsman emphasises the role that good clear communication can play, particularly in helping members to understand the nature of their benefits and in encouraging them to actively engage in its management.  Those managing pension arrangements should ensure that the information they provide to members is clear, correct and can be relied on.

In addition, it is most important that pension scheme members take the time to examine the scheme information they are provided with and understand the nature and value of their pension entitlement.

The cases, summarised on the Office of the Pensions Ombudsman website (www.pensionsombudsman.ie) give a flavour of the variety and types of disputes that come before the Pensions Ombudsman and the means employed to resolve them.  Some examples of these cases that highlight the need for good communication are:

Public Service Pension Reductions and Pension Adjustment Orders

A retired public servant whose pension was subject to a Pension Adjustment Order (PAO), under which part of his pension was paid to his ex-wife, brought this complaint.  The Government department which paid his pension had continued to make unreduced payment to his ex-wife, even though the pension was subject to reduction ordered by Government from 1 January 2011.  It took a long time for the authorities to recognise that there was only one pension, with two recipients.  The PAO is worded as a “specified percentage”.  Logically, if the pension increases or reduces, the amount payable under the PAO must do likewise and they never had any hesitation in paying out increases in the pension in previous years to the ex-wife. Following my intervention the man is now receiving his correct pension and is owed arrears spanning 23 fortnightly payments.  No doubt I will receive a complaint from his ex-wife when they start to recover the overpayments made to her!

Construction Worker

The complainant had alleged maladministration in that her deceased husband’s employer did not register him as a member of the Construction Workers Pension Scheme, and, as a result of this, no mortality benefit was payable from the scheme on the death of her husband.

The investigation found that the complainant’s husband was in fact an eligible employee under the scheme, had been in employment as claimed and his employer had failed to register him with the scheme or make the necessary contributions.  I found in favour of the complainant and required the employer to pay an amount equivalent to the death benefit payable under the scheme.  The dependents, who had been deprived of the main breadwinner, were extremely vulnerable in this situation.

Promised Earlier Pension Date Denied

Seven complaints came from a group of redundant employees, who had been told categorically at the time of their redundancy that their pensions would be paid at age 60 rather than 65.  The trustees had not amended the scheme rules, however, and appeared to be relying on an early retirement rule to give effect to the employer’s promise. When the first member reached 60 the scheme had become insolvent and the trustees refused to pay. It was clear from the evidence that the promise was unqualified and, crucially, the scheme actuary had provided for statutory revaluation of benefits only up to age 60.  Following contact with the employer and its legal advisers and negotiation with the Revenue authorities a settlement was reached which enabled benefits to be paid immediately.

Comment:Refusal of early retirement is common – and correct – when schemes are insolvent.  It was fortunate in this case that the employer was well-resourced and able to commit to the deal that was brokered.

HSE complaint upheld

I receive many complaints from public servants who wish to have overtime payments included in the calculation of their benefits at retirement. The Local Government Superannuation Scheme provides that overtime is not normally included in benefit calculations except in certain circumstances which are specified by the Minister for the Environment in a circular issued in 1991. It is my experience that some public sector organisations fail to understand or else misinterpret the Minister’s circular.

I upheld a complaint earlier this year from a former HSE employee who felt that his overtime met the conditions for inclusion for pension purposes. The HSE had refused his request on the grounds that his overtime was not compulsory.

It is a common misconception in the public service that overtime must be compulsory for it to be considered pensionable. However, the circumstances that are specified in the Minister’s circular include overtime that is not compulsory and a comprehensive examination of the overtime of the former HSE employee revealed that it exactly matched the circumstances required for pensionability.

Refusal to Complete Pension Declaration

Pension scheme trustees and administrators commonly send pensioners forms for completion, in this case called a Pension declaration (sometimes called a certificate of existence).  The purpose is to ensure that the pension is being paid to someone who is entitled to receive it.  A pensioner complained that she could not sign the document that had been presented to her. In this particular case the agency concerned had tried to use the certificate for additional purposes and it contained text which not only didn’t apply to the circumstances of that pensioner, but was so worded as to cause her considerable worry by implying that payment of her pension could be stopped. Following my intervention, the form has been redesigned.

Note for Editors

The Pensions Ombudsman investigates in an independent and impartial manner, complaints of financial loss due to maladministration and disputes of fact or law, in relation to occupational pension schemes, Personal Retirement Savings Accounts (PRSAs) and trust Retirement Annuity Contracts (RACs).  He may award compensation for financial loss.  He is a statutory officer and exercises his functions independently of government and the pensions industry.  He reports to the Houses of the Oireachtas.  There is no cost to the individual complainant for this service.

Paul Kenny is the Pensions Ombudsman.  He was appointed Ombudsman in April 2003. 

For further information contact Mr. Paul Kenny, Pensions Ombudsman at (01) 647 1650, or see www.pensionsombudsman.ie

19th December, 2011

Ends.