Increasingly, this firm is dealing with the consequences of complaints made by pension scheme members about their pension benefits. These claims are probably more frequent than previously because members appreciate that pension benefits, especially defined benefit ones, may be significantly valuable. Also, in 2002, the office of the Pensions Ombudsman was set up as a 'cheap and cheerful' forum, enabling grievances over certain pension matters to be aired without the need to litigate in the High Court.

Whether a pension scheme member wishes to embark on litigation in the High Court or take the less costly route of formally complaining to the Pensions Ombudsman, at a very early stage a trustee, employer or scheme administrator is going to be alerted to the member's grievance.

We have seen the consequences of what happens when a grievance is not appropriately dealt with: if it is not appropriately dealt with, the result is usually unnecessary and expensive litigation. In all cases, take the complaint seriously. There are a number of simple steps that must be taken when the grievance is first aired. The employer ought to make sure that procedures are in place to deal with such complaints. Failure to have a system in place means that executive time can be taken up wondering what to do and deciding who in the organisation ought to take responsibility for dealing with the grievance. The system needs to address complaints raised by members to all relevant parties (for example, scheme administrators) and not just scheme trustees or the employer. Evaluate whether or not it is appropriate to take specialist legal advice. In most cases, it will be. Early intervention can help to resolve the issue speedily, saving management time and money.

Some complaints are within the Pensions Ombudsman's remit and others are not. It is appropriate to check whether the complaint is one that might make its way to the Pensions Ombudsman's office or some other forum such as the High Court. It is usual for the Pensions Ombudsman to re-quire a member to avail of a scheme's internal dispute resolution procedure (IDR) before agreeing to investigate the matter. In any event, trustees ought to have internal dispute resolution procedures in place.

Where the dispute is within the Pensions Ombudsman's remit, failure to have such procedures in place is a breach of the Pensions Act 1990. This can render the trustees personally liable for a fine (shortly to be raised under the proposed Social Welfare and Pensions Act 2007 to between €5,000 and €25,000). For pension disputes within the remit of the Pensions Ombudsman, the IDR procedures must meet the timetable in the applicable regulations.

Fair procedures must be followed. This principle has several practical components:

• Where a conflict of interest arises, appropriate procedures must be put in place to handle the conflict. For example, if a trustee conflicted, he should step down from the investigation process or perhaps completely as a trustee.
  
  
• It may be appropriate to appoint a third party to adjudicate on the matter in an impartial way.
  
  
• When conducting an investigation, trustees must be scrupulously fair (and be seen to be so) to the complainant and other interested parties. Invariably this will mean that each must be copied with the others' submissions and that all parties must be given an opportunity to comment on the statements made by those affected. Also, all must be given an opportunity to comment on the trustees' preliminary findings, which, as a matter of good practice, should be issued in draft before they issue a final determination.

We have found that where these rules are followed, it can be possible to reach an early solution satisfactory to all parties. Effectively, the process requires the investigator to consider the position of each of the relevant parties and understand where that person is coming from. This approach is likely to facilitate an early resolution, especially if the nature of the grievance and the attitude of the parties to the complaint is one of compromise.

Even where the appropriate procedures are followed and where legal and other advice is taken, the complaint may still proceed to the Pensions Ombudsman or be sent directly to the High Court. In either case, where the trustees have followed appropriate procedures, they will be able to defend their actions and will not be open to criticism from the Pensions Ombudsman or the Court for failing to deal with the complaint in a satisfactory manner from the outset.

For further information, please contact Fiona Thornton.


Spring 2007..