Connected Research

Union policy research in the 21st century

Complaints about pension schemes rise 10%

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The Financial Times reports that provisional figures from The Pensions Advisory Service show that complaints about personal and occupational pension schemes rose 10% in the year to the end of March, reaching a total of nearly 8,000.

TPAS Chief Executive Malcolm McLean told the FT that volatile economic conditions were no doubt partly responsible for the increase but that he suspected ‘once more’ that ‘poor customer service remain[ed] the underlying problem.’

Many of the complaints appear to stem directly from the operation of defined contribution schemes,  with one-third concerning policies from life offices with closed books, about which McLean commented specifically concerning the ‘minimum of resources’ devoted in such cases. Other major complaints concerned delays in getting quotes, completing open market options (i.e. for annuities), or in paying out benefits both at retirement and on death (which may also concern defined benefit schemes).

Nevertheless, defined benefit schemes tend to be better administratively for the simple reason that they are not looking to squeeze every last penny of profit from the schemes that they run.  In contrast, insurance companies will be looking to maximise their profits from defined contribution schemes, especially those which have been sold on or closed – where there is, shall we say, less interest in servicing members promptly. The presence of member-nominated trustees on many defined benefit schemes is also evidently an advantage here. At the same time, the failings of largely DC schemes in this context also provides a clear warning to defined benefit schemes whose administration has been outsourced: the contracts which are the basis of the outsourcing arrangement need not only to specify decent service levels but also to set out punitive penalties where there are failings.

TPAS will publish its full figures on complaints in its Annual Report, due in July.

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Written by Calvin

18/05/2009 at 2:08 pm

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