A technical error at the Police Service of Northern Ireland pension scheme has caused a delay in the payment of pensions to 12,000 former police officers and dependants.
Driving up administration standards will be a key focus for defined benefit schemes over the coming months as the April 6 cessation of contracting-out draws nearer.
Clean data and effective processes can avoid costly errors for both scheme administrators and trustees.
Last year Pensions Expert reported that Findel Group Pension Scheme paid more than £2.3m in past-service costs to make good a member-benefit equalisation exercise that was implemented incorrectly, while philately specialist Stanley Gibbons incurred £1.7m in legal costs seeking redress over an error made by a former adviser.
If you tell administrators you’re measuring a service you have a stick to beat them with if they don’t meet standards
Anne-Marie Winton, ARC Pensions Law
Nearly 12,000 pensioner members of the PSNI scheme, an unfunded DB scheme administered by Northern Ireland’s Policing Board, failed to receive their pension payment on January 4 due to a technical failure in the transmission of the BACS file.
In a statement, a spokesperson for the scheme said the failed payment was an isolated incident and those affected received their outstanding balance the following day.
“PSNI Pension Branch apologise for any inconvenience this has caused members and would ask anyone who may incur costs as a result of this late payment to contact them at River House immediately with relevant documentation to have the costs reimbursed,” the spokesperson said.
“A review of the incident has been undertaken and as a result new controls and checks have been put in place to ensure that the issue will not reoccur.”
Chance to put things right
The Pensions Advisory Service’s head of dispute resolution Tony Attubato said members should contact their scheme administrator and give them “a chance to put things right”.
“If the delay has caused them any financial loss – for example, they’ve had to pay extra interest on loans – they should give evidence of this to the scheme,” he said.
If members are unhappy with the response or are struggling to resolve the matter, they should contact TPAS for help and guidance.
Anne-Marie Winton, partner at law firm ARC Pensions Law, said in some cases scheme trustees may only be alerted to delays in payments by member complaints.
“Sometimes an administrator won’t tell the scheme and [is] trying to sort it out,” she said.
Trustees must demand “chapter and verse” from payroll administrators when errors do occur, she said, and interrogate administrators’ performance updates at quarterly meetings.
Members legitimately impacted by delays, both through knock-on charges on failing standing orders and bills, or through indirect loss and distress, could raise a complaint against trustees, she added, on an individual rather than class action basis.
Winton said it was important for trustees to closely measure administrators’ key performance indicators in order to hold them to account.
“If you tell administrators you’re measuring a service you have a stick to beat them with if they don’t meet standards,” she said.
Paucity of accredited administrators
Fewer than 10 UK schemes and third-party administrators have attained Pensions Administration Standards Association accreditation, an independent assessment of compliance with and fulfilment of the PASA administration standards, according to Kim Gubler, PASA director and board member.
Gubler said the accreditation assesses administrators’ business continuity and the robustness of processes deployed in the case of a system failure or drop in service.
“We’d look at the protections and controls in place around pensioner payroll… to mitigate the impact of something going wrong,” she said.
However, many trustees view administration as a “hygiene factor” and target value at low cost, she added.
