Ombudsman to offer easier retirement

Laura Slattery reports on the man the public will contact with all their pension complaints.

By the end of the summer, embattled pension scheme members will have a new sympathetic ear to bend. From the middle of next month, the Office of the Pensions Ombudsman, Mr Paul Kenny, will be accepting complaints from the public.

In 1995, Mr Kenny approached the then Minister for Social Welfare, Mr Proinsias De Rossa, and suggested that a pensions ombudsman position be created.

Back then, Mr Kenny was working for consultants Irish Pensions Trust, now Mercer, and was responsible for handling queries from the Pensions Board, the statutory body regulating pension schemes in Ireland.

"I acted as a conduit for correspondence with the Pensions Board, got information and relayed it back to the board.

"As a result, I became aware that there were things that the Pensions Board could do nothing about under the powers that they had," Mr Kenny explains.

"They had no power to instruct the trustees to pay someone who had lost out. There was actually nothing they could do except ask nicely for someone to put it right."

Eight years later, and pension scheme members, and spouses and dependants of deceased members, will finally be able to receive compensation if they have suffered financial losses as a result of mismanaged schemes.

"Let's say the trustees took four months to pay someone his lump sum. Now okay, they have paid him, he's got his money, but he's lost the use of that money for four months. Someone should have been there to tell the trustees to pay him interest on that lump sum," says Mr Kenny.

In Britain, where a pensions ombudsman has been up and running for some years, complaints often revolve around being given wrong quotations.

"People are told they would have so much, so they make a decision to retire. They may even start collecting benefits on the basis of what was quoted, then someone does a re-check or whatever and says 'Uh-oh, we made a mistake here'.

"And then, of course, there is a complaint because they feel they have taken irrevocable decisions on the basis of information that is wrong."

Unlike the British ombudsman, Mr Kenny will not have the power to award compensation for pain and suffering. However, his rulings are statutorily binding, subject to appeal by the High Court.

Mr Kenny also has the power to hold oral hearings, if there is a conflict of evidence, where face-to-face examination of the parties seems to be the only way of getting at the truth.

"It won't happen very often," he says, having recently told an ICTU pensions conference that he didn't want "the Kenny tribunal" to be sitting for months and months.

When things are not going well, people tend to complain more, and pension scheme members have had a tough time of late.

Some may be anxiously looking over the shoulders of their employer, hoping they won't be asked for an extra percentage or two of their salary to make up shortfalls.

Others will have watched pension funds plummet by an average of almost 7 per cent over the past three years.

Decades ago, contributions aiming at a particular level of pension were based on fairly high annuity rates, Mr Kenny notes, but falling interest rates and the fact that we are living longer means these rates have now "dropped like a stone".

"If people haven't been keeping an eye on the progress of their fund and checking up on the purchasing power of their money in terms of the pension it can buy, they are going to be disappointed," he says.

"People will naturally look around for why this happened and they will find things that otherwise they might not have."

The ombudsman can't do anything about trustees or investment fund managers "simply being bad at investing", nor can he help those who feel they have been mis-sold a pension by an insurance company (that's a job for the financial regulator, IFSRA).

But if contributions intended for a safe fixed-interest fund were accidentally placed in a volatile Japanese equity fund instead, he may be the one to step in.

Mr Kenny, who has inherited a caseload of files from the Pensions Board, also won't be able to solve the problem of badly designed schemes. But if trustees apply the rules unfairly, he can make a ruling.

For example, this may occur when there is a vague definition of exactly who counts as a dependant in the event of a scheme member's death.

"One person might feel aggrieved because they haven't been paid any money," says Mr Kenny.

"I can't examine whether or not they should have been paid, but I can look at the process the trustees used to reach their decision.

"If the trustees failed to get proper information, just lazily ruled people out, and said: 'OK, this guy was married, pay his wife and his two children and don't think about the child he had in another relationship', then I can say I found the procedures to be flawed."

Not being able to force employers to redesign unfair schemes may prove frustrating. Too often, not enough time is spent on the design stage, according to Mr Kenny.

"A lot of schemes haven't been revisited since the divorce referendum. Most employers have never actually thought 'well, how do I deal with someone who is divorced'," he says.

"In some cases, an employer will say 'we have a death benefit of x', and don't think anything more. So what happens? Who is dependant?

"Let's say someone in a non-marital relationship with the same or opposite sex, will we give them the opportunity to nominate the other person as their family member?"

After 34 years working in the private sector, which began with calculating benefits and premiums for insurance companies in pre-decimal Ireland, Mr Kenny is crossing to a more lonely public sector role.

"I can have investigators working and I can have people advising, but at the end of the day, I am the only one who can make decisions," he says.

After the six-year term, Mr Kenny, who is married with three children, will be 63. He's not sure if he will retire at that stage. "I don't just want to dwindle away."

Mr Kenny was chairman of the Retirement Planning Council for three years. One of its messages is that retirement can bring lots of other opportunities.

Thanks to the new ombudsman role, some retirees may now spend less time fighting to rectify inadvertent but costly mistakes made by trustees when calculating their pension entitlements.