Administrators didn’t take correct steps to protect value of fund

Evelyn Ring looks at four sample complaints that were resolved by the Pensions Ombudsman’s Office

* Delay in paying death benefit:

Arthur M was a member of a company pension scheme and at the time of his death in Dec 2007, the value of his scheme stood at €149,000.

However, when his widow, Eileen, received the final settlement in Apr 2009, the fund had shrunk to just €106,000.

The scheme administrators, who had not taken the correct steps to protect the value of the fund as soon as they had been notified of Arthur’s death, accepted the Pensions Ombudsman’s findings and settled at the full value of the fund at the time of death.

* Pension company did not know the rules of a scheme they managed:

In Sep 2008, Susan F asked her pension company to move her pension fund into a cash fund as she believed that this would be more secure than the managed fund it had been in up to that point.

The company did not follow her instruction and told her that the rules of the scheme did not allow her to direct them what to do.

Before the matter could be resolved, Susan’s company went into liquidation and she was made redundant.

When her pension was eventually moved into cash, it had lost value.

The Pensions Ombudsman agreed with Susan that she was fully entitled to instruct the pension company where to place her funds.

However, in this case, the administrators did not know the rules of the scheme under their care.

The Pensions Ombudsman directed the pension company to treat Susan’s benefits as if the funds had been switched to cash when she first asked for this to be done.

nPoor record-keeping and lack of written instructions:

Marie J worked as a public servant and was a member of an additional voluntary contribution plan established with the main superannuation scheme.

In 2007, Marie gave the trustees of the AVC plan (who also acted as consultants) what she believed to be clear instructions to make her funds more secure.

Her instruction was not followed and her funds suffered a considerable loss in value with the downturn in the investments markets in late 2008.

However, Marie’s instruction to the trustee was not given in writing and neither Marie nor the trustee had any notes of meetings or phone conversations to verify the instruction.

The trustee acknowledged the receipt of some kind of instruction but could not confirm what that was and had interpreted it as an instruction to do nothing.

The difference in value between what the fund was worth at Marie’s retirement date and what it could have been worth if it had been moved to cash 18 months before that day was just over €3,200.

The Pensions Ombudsman directed the trustee to pay the difference, plus interest, to Marie’s plan. He also directed the trustee to accept only written instructions from clients in future.

* Transfer of funds:

Monica F worked for the same company for over 30 years and was a member of the company’s defined benefit scheme for all of that time.

The scheme was wound up in 2007 and each members’ funds were transferred into a retirement bond invested in a consensus fund.

The poor performance of the consensus fund meant that the value of Monica’s pension fund declined.

Monica had complained that the trustees and their advisers had been negligent in transferring the entire funds of the scheme into a consensus fund and that they were responsible for her considerable financial loss.

In this type of scenarios, however, scheme members are acquired to take responsibility for their own funds and to decide themselves how they should be invested. The fund managers had made this clear to Monica but she had not understood just what this meant. She had, after all, spent over 30 years as a member of a scheme where she had not been expected to make this decision for herself.

While the Pensions Ombudsman had some sympathy for Monica, he did not accept that the administrators were negligent in this particular case.