Over half all of complaints from pension scheme members are related to administration issues, according to new research from Sackers.
The specialist pension law firm said 54 per cent of member complaints are rooted in scheme administration or maladministration. These results, based on a webinar among trustees and employers, cover both DC and DB schemes.
The second most common cause of complaint was pension transfers (cited by 23 per cent of respondents) followed by overpayments (11 per cent), discretionary decisions (8 per cent) with 4 per cent dealing with ‘other’ issues.
Sackers says these common issues can frequently arise as trustees and administrations under huge pressures given major projects like dashboards and GMP equalisation combined with ever increasing member expectations in terms of the service that they provide.
Sackers senior associate Amy Difford says: “In this environment, the key to reducing complaints is prevention rather than cure. Most member complaints arise not from financial harm or loss, but from feeling ignored, poorly informed and having to chase for updates. In many cases, members escalate concerns simply because they don’t know what else to do and so a significant proportion of those complaints could actually be prevented through better communication and expectation management.”
She adds that trustees working more effectively with administrators will reduce risk and save time cost and stress for all involved.
She adds: “There are some simple but effective steps trustees can take to reduce the risk of complaints escalating. First and foremost, focus on clarity, make sure communications are easy to understand and avoid technical jargon but importantly answer the questions that members ask.
“Engage early with members, don’t wait for something to go wrong before opening the lines of communication. Be selective in what you send: overwhelming members with multiple or poorly timed messages can lead to confusion rather than clarity, however well intentioned. It’s really important to also choose the right channels for your audience: in many cases, a well-timed email or SMS will be more effective than a letter.”
She also recommends signposting to trusted sources, such as regulated financial advice or a scheme’s standard literature, so members know where to go for further support and advisers trustees to keep good records. “Having a clear audit trail of what was communicated and when is essential for resolving issues quickly and defending your position if a complaint does arise.”
Sackers litigation partner James Bingham adds: “With the Pensions Ombudsman frequently awarding compensation in the range of £500 to £2,000 to members on these complaints, occasionally exceeding that in extreme cases, it is in the interests of trustees and administrators to take a proactive stance in their dealings with members.
“It’s often unclear who should pay any compensation – the administrator or the trustee and the use of policies and agreements between trustees and administrators can help to deal with such matters promptly.
“Where both are ultimately respondents to a complaint before the Ombudsman, the decision is sometimes left to the parties to resolve themselves. This lack of clarity adds complexity and delay, further fuelling member dissatisfaction and a joined up approach between trustees and administrators can help to avoid this.”