Pension benefits, member services and communications
The 5.0 million members of the LGPS receive a life time membership service and regular information about LGPS benefits from their host LGPS pension fund upon joining the scheme, via annual benefits statements, upon leaving the scheme, or becoming a pensioner.
Based on the CIPFA LGPS funds benchmarking survey in 2014, the average annual administration cost per member was £20.75 compared with £21.42 in 2013.
It is pleasing the vast majority (estimated at 99.99%) of LGPS members appear to welcome and are content with the information and benefits they receive and the LGPS complies with Pensions Regulator guidance and codes in respect of member communications.
However based on reports from the Pension Advisory Service (TPAS) and the Pensions Ombudsman (PO) (see below) a small minority (0.01%) are recorded as making formal complaints about their pension benefits initially to TPAS and if they are still not satisfied to the PO. The vast majority of cases concern employer decisions about ill-health retirement and or calculation of ill health retirement benefits. This is in line with most other occupational pension schemes.
The Pensions Advisory Service' (TPAS) report to the Scheme Advisory Board 2014
The report below is provided by TPAS as their ‘LGPS experience’ for 2014.
Enquiries to TPAS about the LGPS 2014
In a typical year we deal with over 70,000 telephone calls, 20,000 written questions and 5,000 complaints so it is not always possible for us to accurately identify which pension scheme the complaint or question relates to. Some complainants give us very few details, but take our advice, and we do not hear from them again. Others are confused about what they want to complain about and against whom. It is even harder to identify schemes if the enquirer is simply asking a general pension question but we hope the following gives a flavour of how many and why LGPS members contacted us during 2014.
We recorded that over 1,300 written questions were from public sector pension scheme members. Unfortunately we were not always able to know which public sector scheme the enquirer was a member of but given the size of the LGPS, we can be reasonable confident a significant proportion were LGPS members.
The subject matter that attracted the most written questions from public sector scheme members was ‘retirement planning.’ Typically enquirers wanted to know more about their options and the implications of their choices. For example, what difference would it mean to them if they gave up part of their pension for cash; or if they delayed taking benefits? While their public sector pension often made up a significant part of their overall retirement savings, commonly they wanted to also discuss more widely how it could be used in conjunction with other potential sources of income, e.g. state benefits, to meet their retirement goals. Especially as for many enquirers, retirement was no longer a cliff edge, but a gradual process of reducing work commitments and increasing their free time.
On the telephones we do not track whether the caller was a member of a public sector scheme. Pragmatically this is not normally possible, as callers usually have a variety of questions about all sorts of pension issues and we are keen to help rather than intimidate the caller with excessive requests for information. Like our written enquiries, it is likely a significant number of callers were or are members of the LGPS. Like our experience of written questions, calls were often about retirement-saving choices or options at retirement. Other area enquirers wanted to know more about were the pros and cons of transferring, state pension entitlements, and how the post April 2015 changes would or could affect them. TPAS will always try and answer any pension-related question. Please encourage your members to use us as TPAS are here to help.
Complaints handled by TPAS
In 2014, we recorded that we accepted 129 new complaints about the LGPS for investigation while a further 75 complaints were answered with one letter because we were able to explain the situation to the satisfaction of the potential complainant. Of those complaints we accepted for investigation:
- 50% were about a decision made by a local authority in relation to pension benefits and over three-quarters of these were about ill health early retirement decisions
- 47% were about entitlements, mistakes and delays and 3% other issues
TPAS Complaints accepted for investigation 2014
The picture is different when we look at complaints we closed with one letter. Only one-quarter were about a decision, half of these about ill health retirement. The main topic of concern was what we have described as “entitlement”, in other words disputes over rights and options. 40% of these complaints we closed with one letter. Typically by explaining the effect of pension legislation and reassuring the enquirer they are being treated correctly.
In 2014, we closed 209 existing complaints relating to the LGPS. 23% of the closed cases we investigated subsequently made a complaint to the Pensions Ombudsman Service; this is higher than our typical experience but it is perhaps not surprising, given 67% of the complainants who complained to the Pensions Ombudsman Service were complaining about ill health retirement decisions. Only 5% of the complaints we closed with one letter subsequently decided to make a complaint to the Ombudsman.
We have noted above that a significant number of the complaints we received concerned failed ill health retirement applications. We are not medical experts. We therefore do not attempt to judge someone’s eligibility for ill health retirement. Instead, we look at how the decision was made and form a view on whether the steps taken were appropriate. In particular, checking the regulations’ requirements was followed. Where we feel this has not been the case, common issues include a failure by an employer to obtain certification from an independent registered medical practitioner before a decision is taken, and a lack of evidence that the employing authority actually made the decision. We also sometimes query whether sufficient evidence has been obtained about the effect of treatment in relation to an applicant’s future work capacity. We should not however attempt to replace a decision with one of our own. Instead, if it appears the decision-making wasn’t complete, reconsideration by the relevant employer or administering authority is appropriate and recommended.
Complaints handled by the Pensions Ombudsman
The Pensions Ombudsman (PO) received approximately 186 enquiries/complaints during 2013/2014 regarding the LGPS. A breakdown of the complaints and Pensions Ombudsman (PO) determinations is shown below. Most complaints were about ill health and other retirement benefits. The PO upheld <15% of complaints with the vast majority around 80% being either not upheld, or were rejected, referred elsewhere, or resolved without the need for a PO determination. Around 15% of cases are still underway. Overall the LGPS has had relatively few upheld complaints.
The Ombundsman recieved approximately 186 enquiries during 2013/2014 regarding the LGPS. A breakdown of the determinations is shown below:
|Complaint Upheld||investigation was concluded with an ombudsman's determination and the complaint was upheld|
|Complaint Partially Upheld||investigation was concluded with an ombudsman's determination and the complaint was partly upheld|
|Complaint Not Upheld||investigation was concluded with an ombudsman's determination and the complaint was not upheld|
|Resolved||investigation ended by agreement between the parties, with the involvement of the investigator|
|Rejected||enquiry was closed|
|Referred||enquiry concerned a matter that was better handled elsewhere|
|Open||investigation underway, or case waiting to be allocated to an investigator|
|Other||not known, or ombudsman decided complaint should not be considered further, or agreed to the applicant's request to withdraw the complaint|
The Pensions Regulator (tPR)
The Pensions Regulator is the UK regulator of work-based pensions and is a non-departmental public body established under the Pensions Act 2004. The sponsoring body is the DWP and Parliament sets the legal framework within which tPR regulate.
The Pensions Regulator is responsible for regulating occupational DB schemes and occupational DC schemes, and for regulating limited aspects of work-based personal pensions. The Regulator is also tasked with maximising employer compliance with the employer duties and safeguards related to automatic enrolment into pensions. From April 2015, tPR will have an extended role in respect of public service pension schemes, with responsibility for regulating their governance and administration but not their funding.
Statistics on enquiries of different types (but not specifically for LGPS schemes) are provided in tPR's annual report.