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 Extensive powers of investigation into “state and conduct” (S.18) Can Prosecute offences under the Act

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 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? 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? 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 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 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… 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 Internal Disputes Resolution Complaint in writing To trustees (Occupational Pension Scheme and Trust RAC) To Minister (Public Authority) To Provider (PRSA)

Unless…… 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 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” Notice of Determination in writing Conditions to be met –WHAT HAS BEEN DECIDED…. –WHAT IS RELIED UPON IN DECIDING…. –THAT COMPLAINANT IS NOT BOUND….. –BUT CAN TAKE THE PROBLEM ONWARDS

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 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 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 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… 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?

Powers 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

Investigations 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 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

Determination 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 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 Staff are Civil Servants in the Service of the State Overall cost €1Million p.a.

Main Types of Complaint OTOR: –Referral to Ombudsman, Regulator, or out of time Failure to remit contributions ( %) Calculation of Benefits:( %) Fund values (34 – -59%) Problems with Winding-up ( %) Purchase of added years (public sector) (44 - n/c) Disclosure of information ( %) 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 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 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 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

Reporting 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 Apart from appeals and JR, prosecutions in the District Court for failure to comply with requirement for information –9 convictions in 2010 –Fines € ; costs € –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 Ombudsman 36 Upper Mount St, Dublin