Pensions legislation and case law update: the latest developments week ended 15 October

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In this week’s Insight we report on the Pensions Ombudsman’s guidance note on communicating with members, the Public Service Pensions and Judicial Offices Bill progress through Parliament, the latest PPF 7800 Index Report which shows an improvement in funding, and the introduction of a DB master trust self-certification system.

Pensions Ombudsman: guidance on communicating with members

On 14 October 2021, the Pensions Ombudsman published a new guidance note: Communicating with members which sets out the Ombudsman's views on 'best practice' for member communication. The aim is to share experience and expertise to help improve informal dispute resolution and in turn decrease the volume of disputes and complaints. 

The note explains that over a third of complaints dealt with by the Ombudsman's Early Resolution Service in 2020/21 were concluded through a 'robust explanation' to the customer without contact with other parties. Furthermore, 78% of Ombudsman determinations were either not upheld or only partially so. 

There is a link to a new section of the Ombudsman website, 'How to avoid the Ombudsman' which contains guidance on common complaint areas and links to relevant publications, determinations and case studies which could assist in resolving a complaint without the Ombudsman's office having to be involved. 

The note's 'Top Tips on how to avoid the Ombudsman' include: 

  • Put yourself in the place of the member – be empathetic and listen;
  • Use plain English;
  • Ensure there is a shared understanding of the complaint;
  • Clarify what occurred and what should have occurred referencing relevant legislation, policies or procedures;
  • Clarify the outcome members are seeking;
  • Accept responsibility if something has gone wrong;
  • Make sure members have up-to-date information;
  • Avoid delays; and
  • Comply with legal requirements.

Having effective internal dispute resolution procedures including how and when members are communicated with can often go a long way in preventing a complaint escalating to an Ombudsman setting. The Ombudsman's new guidance note, and updated website should help schemes resolve complaints internally and at an early stage in the process. 

Public Service Pensions and Judicial Offices Bill begins House of Lords report stage

The Public Service Pensions and Judicial Offices Bill is continuing to progress through Parliament. The Bill has now progressed to the report stage in the House of Lords under which the Lords have a further chance to make changes. 

This Bill introduces provisions to remedy the age discrimination identified in the McCloud case (The Lord Chancellor and Secretary of State and another v McCloud and Mostyn and others and Sargeant v London Fire and Emergency Planning Authority and others [2018]) by allowing members a 'deferred choice underpin' when their benefits become payable, of taking either legacy or reformed scheme benefits for service between 2015 and 2022. The Bill also reforms the pension arrangements and increases the mandatory retirement age of judicial office holders to 75 from 70.

After the Bill has completed the report stage and received its 3rd reading in the Lords it will move to the House of Commons for consideration. The Bill is intended to have Royal Assent in early 2022.

Latest PPF 7800 Index Report shows funding has improved

The latest PPF 7800 Index Report setting out the estimated funding position on a section 179 basis as at the end of September 2021 of the eligible 5,318 DB schemes shows that: 

  • The aggregate surplus increased over the month to £108.8bn from a surplus of £83.2bn at the end of August 2021;
  • The funding ratio increased from 104.7% at the end of August 2021 to 106.4% at the end of September; and
  • The deficit of the schemes in deficit decreased to £109.4bn from £130.2bn at the end of August 2021.

DB master trust self-certification system in the offing

Speaking at the PLSA annual conference, Guy Opperman, the Minister for Pensions and Financial Inclusion has confirmed that the DWP, in conjunction with the PLSA, will be setting up a defined benefit master trust self-certification system. This will assist in increasing awareness of DB master trusts and help schemes see if this could be an option for them. 

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