UK - The Pension Ombudsman has predicted the economic downturn will not have a “direct or obvious effect” on its workload over the next three years, although the switch from defined benefit (DB) to defined contribution (DC) schemes could lead to more investment related complaints.
In its corporate and business plan for 2009-12, Tony King, the UK Pensions Ombudsman, revealed that identifying trends or reasons for changes in the number of complaints from one year to the next is “extremely difficult”.
It predicted that for the next three years the level of enquiries would comprise around 4,000 telephone enquiries and 2,900 written complaints, of which around 2,200 will be referred, rejected or discontinued to leave around 750 investigations each year.
That said, it added the number of investigations carried forward would gradually reduce as it said it had made “considerable progress” into a significant backlog of cases so that at the start of 2009/10 only 46 cases were more than 12 months old compared to 450 in April 2008.
The Ombudsman admitted this workload can “easily be distorted if we receive a large group of connected complaints”, but claimed it had not identified any discernible trends over the last few years, and “there are no known major developments expected imminently in the wider pensions landscape” to suggest a rise in complaints.
It pointed out “it will be some years before we feel the impact of personal accounts” and at the moment it would be “impossible” to gauge the extent of its impact on the workload, although it suggested the “greatest risk of immediate impact” would be if employers do not meet the auto-enrolment requirements.
The Ombudsman meanwhile noted that although “on the face of it” the continuing move from final salary DB schemes to DC schemes may result in fewer complaints as DC schemes are simpler and “have less scope for things to go wrong”, it pointed out members bear all the investment risk.
In the corporate plan it noted: “The fact that the DC scheme member bears the investments risk may mean that we receive more investment related complaints, particularly in view of uncertainty in markets over the next while.”
However, despite the economic downturn King said “we do not envisage that the economic downturn will have a direct or obvious effect on our workload”, though he admitted if the current climate leads people to closely scrutinise their finances “they may identify causes to complain about their pensions”.
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 email@example.com