'State your complaint'. Dealing with unhappy scheme members

An effective and efficient internal dispute resolution procedure will help schemes avoid lengthy dealings with the pensions ombudsman.

But what are the most common complaints? And how do schemes ensure their complaints procedures are up to scratch?

Jonathan Reynolds, an independent trustee at Capital Cranfield, spelled out the dangers of a poor complaints procedure, warning: “If you don’t have a good complaints procedure that can resolve these issues quickly and efficiently you’re probably going to end up with the ombudsman.

“That takes time and can end up costing you money. It is best to get it sorted in-house as quickly as you can, make everyone happy and move on.”

The introduction of the full defined contribution pension reforms from April could put special pressure on the ability of pension scheme management teams to handle complaints. 

“I suspect that there will be a lot of freedom and choice-generated complaints simply because people will want things to happen quicker than it’s going to," said Reynolds. “I don’t think many schemes are geared up to make this sort of thing happen in the speed people will hope."

The Pensions Advisory Service identified the most common causes of dispute it deals with as entitlement, payment mistakes, delays and decision-making.

Tony Attubato, the head of dispute resolution at TPAS, said these complaints are often typical of certain types of schemes.

“With delays we see more complaints with regards to DC schemes,” he said. “That just shows how important it is to have robust administration systems in place.

“Mistakes and overpayments are also often a result of administration errors; it's about making sure you have very good record-keeping and ensuring you're quoting and paying the benefits that your scheme is promising."

The most important part of dealing with a complaint, and where things can go most awry, is immediately after the complaint is made. 

Attubato said: “How a scheme deals with a complaint at the very beginning goes a long way to determining whether that complaint can be dealt with quickly and efficiently or whether the complaint escalates, sucking up resources.”

When things go wrong it can take a long time to put them right. Jane Carey, business manager at the pensions ombudsman, gave an indication of how time-consuming casework can be for all parties involved.

She said: “We aim to close our investigations within 10 months, but that is an average and we will have some that go over that. It depends on the complexity of the case.”

If complaints cannot be processed in-house, schemes may be forced to defend themselves to the ombudsman. This will be a further commitment of time and resources. 

Even if complaints against the scheme are not upheld, costs can often not be recovered.

So it all starts at the beginning with effective communication. “The most important thing trustees need to do is communicate well with their members and manage expectations,” said Reynolds.