The old adage is that the customer is always right. However in the real world this is not always true and frequently, through no fault of the pension member, they find out that they are not entitled to the pension that they had been told and therefore they are in the wrong.
It is inevitable that in any industry there will be times when things don’t work perfectly and that, as a result, complaints are received. It is often said that how you deal with complaints shapes your business and how you are perceived in your market place.
A review of Ombudsman cases shows that ill health applications by far dominate their workload but an increasing number of complaints relate to incorrect information provided by Trustees when a member comes towards retirement.
Inevitably, the reason for incorrect information being provided comes back to the thorny old issue of data and how it is recorded on databases. The inaccurate recording of benefit data or a misinterpretation of the rules of the scheme can lead to members basing their financial planning on figures which then turn out to be incorrect.
A recent Ombudsman ruling in March ruled partly in favour of the member, and he received the sum of £1000 compensation, in so far as he had been given incorrect information, but the reduced pension was still the figure that he would receive.
This brings us to the nub of most pension issues and the old chestnut “rules is rules” Under Trust Law the member is only entitled to the amount that the rules say may be paid. The fact, as in the case described, that the member had been promised an entirely different amount falls by the wayside. He received compensation for maladministration but could only receive the pension that he was entitled to.
Trustees will always try to make sure that correct and accurate information is given to members but there will always be some mistakes made however hard everyone tries to avoid them.
These can be mitigated by having a much better understanding of how the administrator controls the data. Regular reporting at Trustee meetings of the accuracy of the data held; sample audit being carried out; clear communication to the members of their benefits; consideration given to a sample audit of benefits especially in known “difficult areas” such as transfer ins, two periods of service etc. Ultimately give data the attention it deserves and not just stuck at the end of a long agenda after a long meeting.
Otherwise it could be your scheme that is next to have the unenviable task of explaining to the customer why their benefit is wrong.