IRELAND - The Pensions Ombudsman has alleged "communication in the pensions industry is sometimes misleading", leaving members uncertain about their contributions and potential benefits.
Irish Pensions Ombudsman Paul Kenny told IPE scheme sponsors and trustees are anxious to comply with regulations, and worry less about whether or not members can understand the information, because the pensions sector is so heavily regulated.
"The problem is most of the communication is done on a box-ticking basis and it is very jargon-laden. Nobody ever takes a step back to check whether Joe Soap can understand it."
In his annual report from the Ombudsman's office, Kenny noted "a significant number of complaints I receive are purely down to poor communication".
Most often, the nature of the scheme was not fully communicated to members which then "built up all kinds of unrealisable expectations in their own minds", Kenny explained.
"In many cases, the quality of communication is so poor that my investigators find it very difficult to establish what exactly was promised in the first place," he added.
Kenny suggested there is a "fine line" between complying with regulations and using plain English in member communication.
"But it can be done," he said. "There are organisations who are exemplary."
Kenny also noted the Irish National Adult Literacy Agency (NALA) was selling a service checking communication for clarity.
"Sometimes [failure to communicate] is by administrators of pension schemes who do not perfectly understand the rules of the scheme or the requirements of the law," he added.
Moreover, the Ombudsman said some pension funds have failed to issue annual benefit statements for defined contribution schemes, leaving members in a situation "where [they] did not know what was happening until it was too late to rectify matters".
"In some public sector bodies in particular, there does not seem to be a satisfactory method of communicating generally with scheme members."
However, he also noted members should not expect trustees to warn against every contingency that may happen in the future.
"All too often, people think of defined benefit schemes as guaranteeing them a certain level of benefit. In reality, such benefits are only 'guaranteed' for as long as the fund is still in existence - and solvent."
His office received 439 new cases during 2006 and dealt with 3,088 telephone enquiries. This represents an increase of 13% and 30% respectively over 2005.
Kenny noted he was "not happy" with the fact that only 307 cases could be closed during the year as this figure was 20% lower than the year before.
He pointed out the main problem was staff shortage which meant the office could not cope as well with the increasing number of requests.
The government has already promised to hire more employees, the report noted.
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