This page contains some extracts from various Rules, Regulations and Laws.

Contents

  1. The Pensions Act 1995 - notification to members
  2. A Guide for Pension Scheme Trustees - complaints from members

The Pensions Act 1995 requires that:

  • before a payment is made to an employer from a surplus, all current and future pensions in payment must be increased annually in line with the Retail Prices Index up to a maximum of 5%, including pensions accrued in the past.
  • trustees satisfy themselves that the use of the surplus is in the interest of the members .
  • members have been notified of the proposal in the manner required by law.

In schemes where payment is permitted by the scheme rules, members have a new right of challenge to the Occupational Pensions Regulatory Authority (OPRA) against the trustees' decision if they believe the statutory criteria have not been followed. OPRA will then investigate the case and decide whether to allow the payment.

The requirement that members be notified of any proposals to take money out of the plan is defined in OPRA Note 3. IBM has not done this because it claims it has not been taking money out of the scheme. Here are a couple of relevant paragraphs from this note below.

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19. For this purpose, the members of the scheme are active members, deferred pensioners, pensioners and other persons entitled to the present payment of benefits under the scheme, such as the spouses and dependants of deceased members. All members must be given two written notices (see paragraphs 20 and 21). Notices should be sent by post to the address at which the member was last known to be living or, in the case of an active member, to the address at which the member works. The legislation therefore makes it a requirement that all members, including deferred pensioners, are informed about the proposal. That means that if there has been no previous communication with deferred members, a letter must be sent to them at their last known address. Notices need not be given where a member has no known address, or if correspondence sent to the last known address has been returned.

20. The first notice must be given after the PSO has given approval in principle to the proposals for reduction or elimination of the statutory surplus (see paragraph 17(a)). This notice must:

  1. give details of the proposals;
  2. outline the requirements of section 37(4) of the Act (see paragraphs 16-18), and tell the members whether the requirements are satisfied;
  3. tell the members of their right to make written representations about the proposals to the trustees before a specified date (not less than two months from the date the notice is given);
  4. tell the members that a second notice will be given to them if the trustees intend to proceed with the proposals (having considered any written representations from the members), and that no payment will be made to the employer until at least three months after the date on which the second notice is given.

A Guide for Pension Scheme Trustees

Complaints from members

The trustees of most pension schemes are required by law to have in place formal arrangements for resolving complaints. This is known as the internal disputes resolution procedure.

This procedure covers disputes between the trustees or scheme managers and the members (including pensioners and deferred members), prospective members, dependants entitled to a benefit, and individuals who were recently, (or claim to be) in one of these categories.

The procedure involves two stages and sets out specific timescales for providing complainants with written decisions.

At the first stage, complaints are dealt with by a person appointed by the trustees to implement the complaints procedure, such as the Personnel Manager or Pensions Manager. If the complainant is not satisfied with the response they receive, they have a right to appeal to the trustees.

At the second stage, the trustees have a duty to consider the complainant’s case fairly, and not simply rubber-stamp the decision reached in the first stage. They should therefore be careful to ensure that they look at the complaint with an open mind.

At both the first and second stages a written decision must be given to the complainant within two months. The trustees’ written decision must contain a statement about the existence of the Pensions Advisory Service and the Pensions Ombudsman.

If the complainant is not happy with your decision, or if your disputes resolution procedure is not operated properly, then they may take the matter further through the Pensions Advisory Service or the Pensions Ombudsman. OPAS, the Pensions Advisory Service, is an independent voluntary organisation which is able to help members of the public who have problems with their pensions (except state pensions). If you are unable to resolve a complaint, or the person complaining is not satisfied with your response, they can take the problem to OPAS. OPAS will provide an independent explanation of the position or assistance to the complainant if they feel your decision could be flawed.

OPAS may in turn refer the matter to the Pensions Ombudsman. The Pensions Ombudsman is an impartial adjudicator who acts independently in deciding complaints or disputes between:

  • members or beneficiaries and the trustees, employer or administrator;
  • trustees and employers (in relation to the same scheme); and
  • two sets of trustees of different schemes.

The Pensions Ombudsman’s decisions are legally enforceable. If you obtain a request for information from OPAS or the Pensions Ombudsman, you should respond helpfully to their request and avoid unnecessary delays. Both bodies act independently, and are only concerned with resolving the problem.

Finally, anyone involved with the scheme can contact OPRA if they think that the trustees are not following procedures properly.

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