THOUSANDS of savers could be “significantly” out of pocket after lengthy pension complaint delays, experts have warned.
The Pension Ombudsman is now advising some customers they may be waiting up to three years just for their case to be looked at, The Sun has learned.
Almost a third of customers are waiting a year for their case to be resolvedGetty – Contributor
The Pensions Ombudsman, part of the Department for Work and Pensions (DWP), is an impartial organisation which resolves customer complaints against pension providers.
For example, it can investigate long delays relating to your pension caused by your pension scheme or your employer without good reason.
It is separate from the Financial Ombudsman Service, which resolves disputes between a wide range of financial firms and customers.
In the past, demand for the organisation has been relatively small, with it typically handling a couple of thousand cases a year.
But over the last year, it has seen a significant surge in complaints, with the number of cases increasing by almost a third compared with 2021/22.
In 2022/23 it received 7,280 new complaints, up 30% from 5,567 the previous year and double the 3,592 it received in 2019/20.
It is understood this has created a huge backlog of cases, with almost a third of customers now waiting more than a year for their complaint to be resolved.
In one more extreme case, seen by The Sun, a customer with a pension transfer complaint was told she would be waiting a further two years to be allocated a case handler after already waiting for 12 months.
A pension transfer is where you move your pension from one provider or scheme to another or merge multiple pension pots.
In this case, the customer was complaining about delays from moving out of her “defined benefit” pension – where you get an income for life – to a personal pension.
When the transfer went through months later than expected, she says she was underpaid by thousands of pounds.
The customer was advised she could use the ombudsman’s “Early Resolution Service” – an informal service which aims to resolve disputes more quickly – but that even then, she would still be waiting another 11 months.
As a result of the delay, the customer has lost out on £500 compensation offered by her pension scheme as it can’t pay her while a complaint is ongoing.
Rebecca O’Connor, head of public affairs at provider PensionBee, said a “functioning ombudsman is an essential backstop for the pensions sector” and several-year delays need to be urgently addressed.
“If the ombudsman isn’t able to do its job in a timely way, this affects trust in the sector,” she said.
“Things sometimes go wrong and savers need to be able to trust that if this happens to them, they can always turn to the ombudsman to help them resolve it as a last resort.”
Ms O’Connor explained that the biggest risk with delays to pension transfer complaints is that customers can end up out of pocket if they were transferring to boost their finances.
For example, they might be transferring to a scheme with lower charges, so a delay could leave them stuck paying higher fees.
They could also be losing out on market performance, which could cost them valuable retirement income.
“If a delay to a complaint resolution takes years, the financial impact can be significant,” Ms O’Connor said.
A spokesperson for The Pensions Ombudsman (TPO) told The Sun that “reducing historical wait times is the top priority” for the organisation.
“Over recent years, TPO has seen a continued rise in demand for its services,” they said.
“As a small organisation with limited funding, this has resulted in customer wait times for our free service becoming longer than we would like.
“TPO has delivered service improvements and efficiencies that are having a positive impact. TPO continues to work with the DWP to reduce wait times and plan further service improvements.”
The organisation has already more than doubled the number of cases it resolved last year compared to the previous year, with 7,784 cases closed in 2022/23 compared to 3,118 in 2021/22.
How do I complain to the Pensions Ombudsman?
TPO may be able to help you if you are, or were, a member of an occupational or personal pension scheme.
An occupational pension scheme is the pension you’re automatically enrolled into when you join a company as an employee.
This may be a “defined benefit” or “final salary” scheme, where you get a guaranteed income in retirement, or a “defined contribution” scheme, where you build up a pot of money.
A personal pension is one you set up for yourself, for example, if you’re self-employed.
TPO could also help if you are a beneficiary of someone else’s pension scheme, for example, if you get divorced or a relative dies.
Examples of things you can complain about your provider for include:
taking too long to do something without good reason
failing to do something they should have
not following their own rules or the law
breaking a promise
giving incorrect or misleading information
not making a decision in the right way
TPO can’t investigate complaints about your state pension.
If you aren’t sure whether you can make a complaint, you can contact the ombudsman to discuss your case by calling 0800 917 4487 or emailing [email protected].
To make a formal complaint, you need to submit an application along with any relevant documents.
Visit: pensions-ombudsman.org.uk/submit-complaint to get started.
What are the different types of pensions?
WE round-up the main types of pension and how they differ:
Personal pension or self-invested personal pension (SIPP) – This is probably the most flexible type of pension as you can choose your own provider and how much you invest.
Workplace pension – The Government has made it compulsory for employers to automatically enrol you in your workplace pension unless you opt out.
These so-called defined contribution (DC) pensions are usually chosen by your employer and you won’t be able to change it. Minimum contributions are 8%, with employees paying 5% (1% in tax relief) and employers contributing 3%.
Final salary pension – This is also a workplace pension but here, what you get in retirement is decided based on your salary, and you’ll be paid a set amount each year upon retiring. It’s often referred to as a gold-plated pension or a defined benefit (DB) pension. But they’re not typically offered by employers anymore.
New state pension – This is what the state pays to those who reach state pension age after April 6 2016. The maximum payout is £203.85 a week and you’ll need 35 years of National Insurance contributions to get this. You also need at least ten years’ worth to qualify for anything at all.
Basic state pension – If you reach the state pension age on or before April 2016, you’ll get the basic state pension. The full amount is £156.20 per week and you’ll need 30 years of National Insurance contributions to get this. If you have the basic state pension you may also get a top-up from what’s known as the additional or second state pension. Those who have built up National Insurance contributions under both the basic and new state pensions will get a combination of both schemes.