When dealing with member complaints, trustees may wish to offer a small sum to compensate the member for any distress and inconvenience they have suffered. Usually this will reflect the amount the Pensions Ombudsman might award if the complaint were to be taken to the Ombudsman. Guidance published by the Ombudsman therefore provides a useful benchmark for trustees.

The Ombudsman has recently published revised guidance on redress for non-financial injustice (i.e. distress and inconvenience) caused by maladministration. The guidance now sets out fixed amounts for non-financial injustice awards, with the aim of enhancing transparency, creating consistency and managing expectations for all parties. The guidance notes, however, that the Ombudsman will always take account of the individual circumstances of the case.

Category of non-financial injustice Description (one or more factors to apply – depends on facts of the case) Amount of award
Nominal
  • Minimal or no distress or inconvenience established
  • Very limited distress and duration
  • Single occasion
  • An apology would be adequate redress
 No award
Significant
  • Some significant distress or inconvenience has been caused to the member
  • One or more occasions
  • Effect was short-term
  • Trustees took reasonable steps to put matters right
 £500
Serious
  • Serious level of distress or inconvenience that has materially affected the member
  • Several occasions
  • Lasting effect over a prolonged period
  • Trustees were slow to put matters right
 £1,000
Severe
  • Severe and adverse, but not quite exceptional, level of distress or inconvenience caused to the member
  • Chronic situations
  • Numerous or repeated or compounded errors over a prolonged period, but opportunities to notice and remedy those mistakes were missed (more so if true position could have been ascertained easily)
  • Lasting effect over a prolonged period
  • Member’s wellbeing affected e.g. serious detriment to health
  • Member prevented from making informed life decisions at critical times e.g. a decision to retire early or resign from employment that might not have otherwise been taken
  • Trustees failed to respond to the member
  • Trustees failed to take steps to put matters right
  • Trustees failed to understand the member’s distress or inconvenience
 £2,000
Exceptional
  • One or more severe factors above apply
plus
  • An aggravating factor e.g.:
    • member was persistent in explaining to the trustees their distress or inconvenience
    • trustees wilful or reckless
    • repeated failure by trustees to engage with the Ombudsman
    • widespread failure by trustees to address complaints
    • grave adverse health consequences for the member
    • disregarding IDRP recommendations
 More than £2,000

Is any action required?

The new approach takes immediate effect for all open and new cases. Trustees should therefore take the revised guidance into account in dealing with all ongoing and future member complaints.