by Roderick Ramage, solicitor, www.law-office.co.uk
first published in New Law Journal (firstname.lastname@example.org) on 25 October and 1 November 1996
This note and precedent are not advice to any person and may not be taken as a definitive statement of the law in general or in any particular case. The author does not accept any responsability for anything that any person does or does not do as a result of reading it.
The Pension Act 1995, s 50(1) enacts: "The trustees or managers of an occupational scheme must secure that ... arrangements ... for the resolution of disagreements between prescribed persons about matters in relation to the scheme are made and implemented." Detailed provisions for this purpose are made by the Occupational Pension Schemes (Internal Dispute Resolution Procedures) 1996 (SI 1996 1270), which with s 50 came into force on 6 April 1997. If the arrangements are not made or implemented, any trustee or manager, who has failed to take reasonable steps to comply with s 50(1) is liable to a civil penalty imposed by the Occupational Pensions Regulatory Authority up to a maximum of £1,000 in the case of an individual and £10,000 in other cases. The only schemes, which are exempted, are schemes in which all members are trustees or schemes with only one member.
Neither the statute nor the regulations prescribe how the procedures are to be made or implemented. They can be incorporated into the body of the pension scheme's trust deed or rules, but this would probably be cumbersome in many cases, because of the formality normally required to alter the trust deed or rules both to incorporate the procedure and to alter it if necessary. Moreover only the trustees or managers are responsible for making and implementing the procedures, whereas the power to alter the trust deed and rules is often vested in the principal employer with the consent of the trustees.
The Occupational Pension Schemes (Disclosure of Information) Regulations 1996 (SI 1996/1655) reg 4 requires the trustees to furnish in writing information specified in Schedule 1 to various persons, including members and prospective members of occupational pension schemes. Regulation 8 contains a similar obligation in respect of certain other schemes. Schedule 1, para 25 states: "What procedures the scheme has for the internal resolution of disputes ... and the address and job title of the person to be contacted in order to have recourse to these."
The following specimen procedure (precedent B), which is based closely on the wording the regulations, is intended to be used as a free standing document to be issued to the members by a trustees' written announcement or in the scheme booklet. Precedent C is a short and simplified alternative and, although it does not contain the details, the trustees or managers must make arrangements which deal with all the matters in the regulations (and precedent B). Precedent A is an enabling clause for incorporation in the trust deed or rules.
xx The Trustees shall make and implement such arrangements for the resolution of disagreements about the Scheme as are from time to time prescribed by the [Pensions Statutes] and regulations made under them.
[name] Pension Scheme] ("the Scheme")
disputes resolution procedure
This procedure is issued by the Scheme's trustees under: section 50 of the Pensions Act 1995; the Occupational Pensions Schemes (Internal Dispute Resolution Procedures) Regulation 1996; and rule xx in the Scheme's trust deed and rules.
1 This is the procedure to resolve disagreements between the trustees of the Scheme on the one hand and on the other hand any person in the following categories: a member of the Scheme; a widow, widower or surviving dependent of a member of the Scheme who has died; prospective members of the Scheme; persons who cease to be within the above categories within six months immediately before an application for a decision under this procedure; and any person claiming to come within one of the above categories. In this procedure any person within any of the above categories is referred to as "Complainant".
2 A Complainant may nominate a representative.
3 Applications by a Complainant for a decision must be made in writing, signed by or on behalf of the Complainant and sent to the trustees at the address at the bottom of this notice. The application must contain: the full name, address, date of birth and national insurance number of the Complainant and, where the Complainant is not a member, similar particulars of the member and details of the relationship between the Complainant and member; the full name and address of the Complainant's representative and whether that address is the address for service of any documents in connection with the disagreement; and a statement as to the nature of the disagreement with sufficient details to show why the Complainant is aggrieved.
4 The complaint will be considered by [one of the trustees to be nominated by them (or) [name] (or) a committee by of a least two trustees, of whom one is member nominated and the other is company nominated].
5 The decision will be notified to the Complainant in writing within two months of the date on which the application was received. The notice of the decision will include: a statement of the decision; a reference to any legislation relied upon; a reference to any part of the Scheme rules relied on and, where discretion has been exercised, a reference to any parts of the Scheme rules by which the discretion is conferred; a reference to the Complainant's right to refer the disagreement for reconsideration by the trustees.
6 If, in any case, a written notice of a decision is not given within the two months, an interim reply will be sent to the Complainant setting out the reasons for the delay and an expected date for issuing the decision.
7 At any time within six months from the date of the notice of a decision, a Complainant may apply to the trustees to reconsider the disagreement. The application for reconsideration must be made in the same way as an application under paragraph 3 above and in addition to the matters to be stated under that paragraph must include: a copy of the notice of the decision on which a reconsideration is requested; a statement of the reasons why the Complainant is dissatisfied with the decision; and a statement that the Complainant wishes the disagreement to be reconsidered by the trustees of the Scheme.
8 The application for a reconsideration of a decision on a disagreement will be considered by [all the trustees (or) a committee consisting of the total number minus one of the trustees].
9 Within two months from the date on which the particulars of a reference of reconsideration were received by the trustees, the trustees will issue to the Complainant a written notice of their decision which will include: a statement of the decision and explanation as to whether and, if so, to what extent that decision either confirms or replaces the decision previously made; a reference to any legislation relied on; a reference to any parts of the Scheme rules relied on and, where discretion has been exercised, a reference to any parts of the Scheme rules by which the discretion is conferred; a statement that the Pensions Advisory Service is available to assist members and beneficiaries of the Scheme in connection with difficulties which they have failed to resolve with the Trustees and the address at which may be connected, and a statement that the Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to the Scheme and the address at which he may be contacted.
10 If, in any case, a written notice of decision is not given within the two months, an interim reply will be sent to the complainant setting out the reasons for the delay and an expected date for issuing the decision.
Any correspondence or applications in connection with this procedure should be addressed to The Trustees The [name] Pension Scheme at [address]
[name] Pension Scheme] ("the Scheme")
disputes resolution procedure
1 You may make a complaint if you are a member of the Scheme, a widow, widower or dependant of a member, are eligible to become a member or have been such a person within six months before your complaint is made.
2 All complaints must be in writing and must include details of the complaint and also your full name, address, date of birth and national insurance number. It will be dealt with by [name], who, if possible, will give you a written decision within two months. If the decision cannot be given with two months you will be told the reason for the delay and the expected date of the decision.
3 If you do not agree with the decision, you may, within six months of the decision, apply to the trustees to reconsider it and the trustees will, if possible, give you a written decision within two months.
4 If you still do not agree with the decision, you will be entitled to ask the Pensions Advisory Service to assist you or to apply to the Pensions Ombudsman to investigate your compliant.
Any correspondence or applications in connection with this procedure should be addressed to
The [name] Pension Scheme
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