Pension benefits, member services and communications
The 5.2 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 2015, the average annual administration cost per member was £18.68 compared with £20.75 in 2014.
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 2015
For the Pensions Advisory Service (TPAS), 2015 has been a particularly busy year . This has largely been as a result of the new pension freedoms allowed to members of the defined contribution schemes. But the increased focus on pensions caused by the new freedoms has led to a large rise in enquiries about all pension types across all our service areas.
General enquiry volumes
In 2015 we received over 100,000 calls to our helpline, 23,000 emails and letters with pension questions, and dealt with a further 23,000 webchats. It is not always possible for us to know what type of pension plan(s) an enquirer has. But it is safe to assume that given the size of membership of the public sector schemes, a significant proportion came from these schemes.
Where it was clear the enquirer was a member of a public sector scheme, the top reason why someone had contacted us was to get more help or information about their retirement planning; 30% of all questions were on this issue. The second most popular subject was ‘general legal rights’. Here people wanted to know more about how pension legislation had impacted on their own rights and options.
Although the new freedoms permitted since April 2015 relate to defined contribution schemes, just under 150 public sector scheme members sent us questions about them.
We do not track the type of a pension plan a caller is a member of. However, almost certainly, a significant number of the calls received were from members of local government pension schemes. Perhaps not surprisingly the top reason why someone called us in 2015 was to find out more about the new freedoms available since April 2015. Calls about this accounted for around 10% of all calls. Other popular questions concerned; how to access benefits and how to plan for retirement, callers wanting guidance on the decisions they need to take, the pros and cons of transferring, and the tax reliefs available on pension contributions, also featured highly.
In 2015 we recorded that 251 new complaints were against a Local Government Pension Scheme fund. Of these, we felt 175 required further investigation whilst the remainder could be dealt with one letter.
Of the complaints we closed with one letter, over half were disputing their entitlement. The real cause of complaint was confusion or a misunderstanding about how their pension benefits were worked out and what their rights and options were. We trust our responses cleared up any confusion and gave reassurance that their pension entitlement was correct.
We investigated 175 complaints. Not initially because we thought there were strong grounds for complaint, but because we needed to know more from the scheme about what had happened. The top cause for complaint was unhappiness over an ill-health retirement decision. Such disputes accounted for 37% of the cases we looked at further. We are not medical experts so are not able to give a view on whether an ill-health pension should be awarded. Rather, we looked at how the decision was reached. In particular forming a view on whether the scheme’s regulations had been followed correctly.
Someone’s entitlement, rights and options was the second most complained about issue. Errors made in benefit calculations, usually when working out quotations, but including some which led to overpayment of pensions and lump sums were the next highest cause of complaint.
We closed 153 investigated complaints; 27 (17%) subsequently exercised their right to ask the Pensions Ombudsman to determine their complaint. Only 9 of the complaints we closed with one letter later complained to the Ombudsman.
The Pensions Advisory Service contact details can be found at: http://www.pensionsadvisoryservice.org.uk/ask-us.
Complaints handled by the Pensions Ombudsman
The Pensions Ombudsman (PO) received approximately 229 enquiries/complaints during 2014/2015 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 <8% of complaints with the vast majority around 90% being either not upheld, or were rejected, referred elsewhere, or resolved without the need for a PO determination. Around 13% of cases are still underway. Overall the LGPS has had relatively few upheld complaints.
The Ombundsman recieved approximately 229 enquiries during 2014/2015 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 had an extended role in respect of public service pension schemes, with responsibility for regulating their governance and administration but not their funding.
The Regulator has issued Code of Practice 14 for public service pension schemes. This code came into legal effect on 1 April 2015.