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Irish Ombudsman sees leap in fund value complaints

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IRELAND - Complaints to the Pensions Ombudsman about pension fund values increased by 71% from 2008, and many of these were related to investor concerns about fund values.

Provisional figures from the Ombudsman's office showed the office received 1760 new complaints in 2009, although around two-thirds of investigations completed during the year were the result of advice and mediation rather than through a formal investigation and determination.

Following a 40% increase in complaints in 2008, Paul Kenny, the Pensions Ombudsman, focused on improving efficiency in the complaints handling system - including the introduction of a new case tracking system - which led to the closure of 711 investigations over the year, an increase of 11%.

In terms of categories of investigations, the largest group - 113 - related to the calculation of benefits linked in the main to public service pension funds, in situations where the benefits accrual in different schemes can become quite complicated.

However, the biggest increase related to investigations about fund values, as the figure more than doubled from 34 to 84 over the year.

Kenny said most complaints related to the way the funds were invested and contained allegations for example, suggesting trustees, administrators and other officials involved in the running of a scheme were not following instructions from members on how investments should be disposed.

He added: "A lot of them were not upheld, particularly as some people expected their fund managers to be psychic and anticipate instructions."

The findings also showed that trustees are reliant on members to give them instructions, but "when the bottom fell out of the market then [members] look for someone else to blame".

Kenny added there were some cases "where it was clear that instructions to change investments were not adhered to, and in those circumstances I have no hesitation in giving people redress".

One area where the Ombudsman said saw a surprising fall in complaints during 2009 was in disclosure of information cases, even though one of the more perceived faults in pensions is bad communication.

Kenny said: "We try to get to the truth of the matter and say this is what we found and this is how you can get rid of the problem. My philosophy has always been that a formal determination from this office is a failure of the system because it means someone was not prepared to give in or recognise a mistake has been made."

That said, he is hopeful that there might not be such a large increase in complaints in 2010, particularly as The Ombudsman's office starts the year with just 398 investigations to review, 16% less than the previous year.

"The massive shocks to the pensions industry and the widespread publicity which resulted meant that people were much more aware of the need to monitor their pension arrangements very carefully. The old practice of leaving the pension to look after itself is now well and truly buried and I am very pleased that the level of interest and understanding in the area has grown enormously. Vigilance is key", he said.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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