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APTi Conference 2011 The Role of the Pensions Ombudsman Paul Kenny

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APTi Conference 2011 The Role of the Pensions Ombudsman Paul Kenny. Why is there a Pensions Ombudsman?. The Pensions Act, 1990, was the first attempt to regulate the conduct of Occupational Pension Schemes Pensions Board set up as the Regulator Criminal offences created

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APTi Conference 2011

The Role of the Pensions Ombudsman

Paul Kenny

why is there a pensions ombudsman
Why is there a Pensions Ombudsman?
  • The Pensions Act, 1990, was the first attempt to regulate the conduct of Occupational Pension Schemes
  • Pensions Board set up as the Regulator
  • Criminal offences created
  • Extensive powers of investigation into “state and conduct” (S.18)
  • Can Prosecute offences under the Act
why is there a pensions ombudsman 2
Why is there a Pensions Ombudsman? -2
  • To fill a gap in the Pensions Act: Board can investigate, prosecute, but not order redress:
  • In 2002, Office of the Pensions Ombudsman established (Pensions Amendment Act, 2002)
    • To investigate complaints of maladministration in relation to pension schemes and PRSAs
    • To award redress in case of financial loss
    • To decide matters of fact or law
      • Maladministration and non-compliance are not always the same thing
the legal position
The Legal Position
  • Determinations are binding on all parties
  • Can be enforced by Order of the Circuit Court - on the application of the Complainant or of the Pensions Ombudsman*
  • May be appealed to the High Court within 21 days
  • PO can prosecute for failure to provide information &c.Enforcement Orders also possible in these cases *Minister SFA pre-March 2010
who can complain
Who Can Complain?
  • an actual or potential beneficiary
    • a member or a former member
    • a surviving dependant
    • a person claiming to be a member or a surviving dependant
    • a contributor to a PRSA
    • a personal representative of a member or contributor
    • a widow or widower of a member or contributor
    • If a person cannot act for themselves, a representative may make the complaint
    • No charge to complainants
against whom
Against Whom?
  • Former / trustee
  • Former / employer
  • Former / PRSA provider
  • Other category “to be prescribed”
    • That means Regulations – Statutory Instrument
  • Regulations: “Administrator” includes persons
      • Providing administration service
      • To whom S.59 duties delegated
      • Interpreting or applying scheme rules
      • To whom PRSA provider has delegated
time limits
Time Limits
  • If event complained of occurred before “Appointment Day” (28 April, 2003),time limit is six years back from date of signature of 2002 Act* – i.e., 13 April 1996.
  • If post- Appointment Day, either
    • Six years from the date of the event, or
    • Three years from the date complainant knew or ought to have known….

*Pensions (Amendment) Act 2002

this is being tested
This is being tested…
  • Complaint regarding failure to pay benefits
  • Benefit vested (Leaving through no fault) many years ago
  • Benefits surrendered by ER/Trustee in March 1996
  • PO has taken the view that “action” in this case is failure to pay the benefits when they fell due under the rules – ongoing trustee duty, not discharged
  • Trustee has appealed - Judgment awaited
before a complaint is taken
Before a Complaint is Taken
  • Internal Disputes Resolution
  • Complaint in writing
      • To trustees (Occupational Pension Scheme and Trust RAC)
      • To Minister (Public Authority)
      • To Provider (PRSA)
  • Dispute or complaint already subject to investigation by the Board
    • Which certifies
    • “completed or terminated…………”
  • Scheme in Winding Up
  • Frozen Scheme with no Employer trading
  • From 2006, if PO thinks it appropriate to waive –

this option is available only in the private sector

exhaustion of idr
Exhaustion of IDR
  • After three-month deadline has passed, PO may consider the IDR process to be “exhausted within its terms”, and proceed to investigation
  • Also applies to the Public Authority schemes
complaint considered by appropriate person
Complaint Considered by “Appropriate Person”
  • Notice of Determination in writing
      • Conditions to be met
structure of idr
Structure of IDR

Considerations in Ireland:

  • Simple
  • User-friendly
  • Saving time
  • Trustees can decide structure of IDR procedure appropriate to scheme - size, circumstances
  • IDR result not binding on the complainant
practice varies
Practice Varies
  • Some schemes have good and established IDR processes –e.g.,
    • Expert adjudicator recommends solution
    • Committee considers and recommends
  • If not, advice is available
  • IR machinery may not be suitable for Pensions
  • Trustees and HR people need to understand IDR requirement may not suit established “Grievance Procedures”
  • Employment grievance procedures not open to ex-employees, pensioners, dependants
public sector
Public sector
  • Would prefer not to be mixed up with this
  • Traditionally appeals take time – 3 month limit!
  • Local expertise may be absent
    • Or people don’t want to know
  • Appeals procedures not defined; e.g.,
    • S. 11(5) “…may appeal to the Minister…..”
    • Information sometimes not readily available (though required by Disclosure Regulations)
failure to operate idr
Failure to Operate IDR
  • Breach of the Pensions Act
  • Criminal Offence
  • But sanction on employer / trustee does not give redress to the complainant
  • PO now has discretion after the expiry of three-month deadline

“to deem the process to be exhausted within its terms”

when a complaint is received
When a complaint is received…
  • Preliminary Examination
    • Is IDR required or to be waived?
    • Is the complaint within terms of reference?
    • If not: divert to DSFA, FSO, Pensions Board, Financial Regulator, Equality Tribunal
      • MOUs
    • If within jurisdiction, can the problem be solved quickly – intervention, mediation, even explanation?
  • To Summon witnesses
  • To require production of documents
  • Powers and privileges of the High Court
    • Witness immunities and privileges
    • Statement/admission not admissible in criminal proceedings
  • To state a case to the High Court
  • To make report on investigation
    • Absolute privilege in Defamation
  • To decide on Jurisdiction
  • To exchange information with Board and Revenue Commissioners
  • Respondents notified
  • Papers copied to all known to be involved
    • Invited to name anyone with an interest
  • Investigators follow up
  • Oral Hearings possible – complainants often request them but they are seldom granted in practice - usually what they actually want is a meeting
oral hearings
Oral hearings
  • Evidence under oath
  • May be held in public
  • Not often used – Usual conditions:
    • Dispute of fact not solved from the papers
    • Person’s good name at stake
    • Conflict of evidence – veracity of witnesses
      • These conditions are published on the Website
  • Pensions Ombudsman may give Preliminary View
    • Time allowed for parties to respond to this
  • PO makes Determination
  • Final and binding – can be enforced by Circuit Court Order
  • Appeal to the High Court within 21 days
other matters
Other Matters
  • Jurisdiction may overlap with that of Pensions Board, Financial Services Ombudsman, Financial Regulator, Equality Tribunal
  • Memoranda of Understanding with FSO, Board, Regulator, Revenue Commissioners, ODCE
  • MoU with UK Pensions Ombudsman – joint jurisdiction
other matters cont d
Other Matters, cont’d
  • Staff are Civil Servants in the Service of the State
  • Overall cost €1Million p.a.
main types of complaint
Main Types of Complaint
  • OTOR:
    • Referral to Ombudsman, Regulator, or out of time
  • Failure to remit contributions (106 - + 49%)
  • Calculation of Benefits: (104 - -8%)
  • Fund values (34 – -59%)
  • Problems with Winding-up (22 - +57%)
  • Purchase of added years (public sector) (44 - n/c)
  • Disclosure of information (25 - -49%)
  • Failure to grant early retirement – solvency issues and ill health (37 – n/c)

Overall 2010 down 25%; 2009 up 71%; 2008 up 49%

compliance with pensions act
Compliance with Pensions Act
  • Most trustees and employers comply with most of the Act
  • Most Common failure is in disclosure of information
  • Worst failure is in remittance of contributions
    • S. 58A requires employers to remit all contributions (DC) or employee contributions (DB) within 21 days of month end
    • Confirm remittance, e.g., on payslip
    • Extra disclosure in new Regulations
  • Theft of contributions
disclosure of information
Disclosure of Information
  • Many complaints lie in failure of communication
  • Merely to adhere to the Disclosure Requirements does not represent high quality communication
  • Quantity -v- Quality
  • Regulation and supervision – small print
    • Legally correct but incomprehensible
    • What’s wrong with using English?
not all complaints are serious
Not all complaints are serious
  • Not pensioned on all of his service – shortfall in benefits
    • Misinformation on transferred service – overstated by 100 days - “loss” was €3.38 per fortnight
    • PO cannot compensate for loss of expectation
  • Civil servant missing pension credit for ONE day of his service
    • It was a strike day
  • One man complained that trustees hadn’t told him inflation would erode the value of his pension
  • Complainant insisted on being paid by cheque, then complained compensation for EFT not included in pensionable pay
  • Reports are absolutely privileged
  • Annual Reports and Digest of cases
    • Protection of identities
    • Name and shame?
    • If Complainant goes public….
  • Prosecutions for non-production of information
    • Criminal sanctions
  • Applications for enforcement of discovery
legal proceedings
Legal Proceedings
  • Apart from appeals and JR, prosecutions in the District Court for failure to comply with requirement for information
    • 9 convictions in 2010
    • Fines €200-3500; costs €1300- 2300
    • One under appeal to Circuit Court
  • Power of Enforcement
    • Primary enforcer should be the Complainant
    • Application to circuit Court
    • Minister’s Power to apply now given to PO
Office of the Pensions Ombudsman36 Upper Mount St, Dublin 2
  • 01 647 1650
  • 01 676 9577