UK - The Pension Advisory Service (TPAS) reported a "worrying increase" in the number of enquiries to its helpline about the non-payment of pension contributions by employers.
Figures from its annual review for 2008/09 showed the number of calls on this issue almost doubled from 26 a month to 42 over the 12-month period, and although it admitted the numbers are "relatively small" the organisation said it was a "worrying feature" of its latest statistics.
TPAS reported: "This increase is no doubt linked to the difficult economic landscape, and unfortunately pension schemes will not be immune. We told callers that the non-payment of pension contributions was a regulatory matter and recommended that they contact the Pensions Regulator (TPR)."
Meanwhile, the number of complaints to the service increased 10% over the year to 7,746, with the main issue relating to poor administration of pension funds causing delays and mistakes, and of which a significant proportion related to the takeover of some insurers.
The annual report showed TPAS - an independent organisation - received 75,000 calls and 12,500 written enquiries over the year, and 25% of these related to occupational pensions, 44% about state pensions, 13% on individual pensions and the remainder on general pension issues.
TPAS reported there was an unsurprising increase in the number of enquiries regarding the security of pension schemes and pension providers, as a result of the economic situation, as pensioners were concerned about the protection available if an annuity provider became insolvent or a pension scheme could not pay out benefits, while current members queried the process if an employer became insolvent and the occupational scheme was underfunded.
The overview of the organisation's activities also showed the economic downturn had triggered particular concerns in members of defined contribution (DC) schemes, "many of whom had not appreciated the value of their pension fund was directly linked to the stock market".
In many cases, TPAS pointed out, these members had not made a proactive investment choice and had been placed in a default fund so depending on how far from retirement they were, their savings may have been invested entirely in shares.
TPAS admitted it was "worrying" so many of the recent enquiries had shown a large number of people unaware of how far their retirement savings are exposed to the stock market, however it highlighted complaints could only be made if there had been inadequate information or advice, while complaints about investment performance could only be addressed if the fall in value was caused by maladministration.
However, the report revealed complaints against occupational schemes fell by 2% overall in the 12-month period compared to a 32% increase for individual plans, although allegations of maladministration in occupational schemes rose by 26%.
Malcolm McLean, chief executive of TPAS, acknowledged the tough economic conditions in the second half of the year may well have exacerbated the problem.
He said: "There was undoubtedly a 'double-whammy' effect. Many savers had experienced significant reductions in the value of their pension savings from continuing stock market falls and delays in obtaining an annuity quote or award often meant a further reduction in the pension eventually secured."
TPAS confirmed it managed to resolve 92% of the complaints made in the year, primarily regarding delays, although it revealed 558 complainants took the matter further and brought the issue to the attention of the Pensions Ombudsman.
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com
No comments yet