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13 Nov 2019
by Kirsty Furze

Are you raising awareness about pension redress claims?

We’ve heard plenty in the press in recent years about pension scams; hopefully employees are now more on guard against being duped out of their pension pots. Trouble is, one thing always follows another, and we’re now seeing a rise in claims management firms offering former scheme members the chance to ‘win’ financial repayment or redress for a pension transfer.

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The rise in pension redress claims is causing pension trustees and scheme administrators a lot of pain. To tackle this, it would be really helpful if employers could help raise awareness of this issue – perhaps HR could include it in their next employee communications campaign?

What’s the issue?

The ‘claim’ is that the pension scheme failed to make satisfactory checks on the receiving scheme before allowing a member to transfer-out their pension benefits. It means claims management firms are submitting Data Subject Access Requests (DSARs) and it is happening for many of our clients. (If you’re interested, it all stemmed from the Pensions Ombudsman upholding Mr N’s case, which led to him being reinstated in his original pension scheme.)

The impact for reward and HR comes in two ways:

  • You may have employees who are in the process of being scammed or who have taken a transfer out and are now being pressured to make a redress claim. Both cause stress and anxiety – not to mention the potential to lose a big amount of money if the scam is successful – and we all know what that can do to an employee’s performance at work.
  • Dealing with DSARs take a great deal of time – definitely for your pension trustees and scheme administrators, but potentially for your HR team too.

Responding to DSARs is painful. The pension scheme’s Internal Dispute Resolution Procedure (IDRP) will need to be worked through and there may be a Pensions Ombudsman case to deal with as well. Figuring out what documentation is within the scope of a DSAR can be difficult. Legal advice is frequently needed, adding to time and cost. This is particularly frustrating as many redress complaints are at best only speculative and at worst disingenuous.

No wins, just costs – are your employees aware?

Most pension trustees are taking extreme care and undertaking significant due diligence when dealing with pension transfers. Although this can lead to a member getting annoyed at the time a transfer request takes, it does mean valid redress claims are rare. IDRP and Pensions Ombudsman complaints are likely to fail.

The claims management firm may say “no win no fee”, but they’re facing high costs progressing these claims (as are pension schemes and the supporting employer) with a low chance of success. It’s important your employees and pension scheme members know this.

The author is Kirsty Furze, scheme manager at Punter Southall Governance Services.

This article is provided by Punter Southall Governance Services.

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