Providing pensions can be a thankless task for employers and providers alike. It's an experience that a number of employers have got to know well since the UK introduced its auto-enrolment obligations.
Where employers are unhappy with their pension provider there will usually be contractual provisions on how to terminate the relationship. However, what happens when there's a dispute or the contractual route doesn't seem to be working? Won't that involve an expensive and legally draining dispute between provider and employer with little financial incentive for the employer to pursue it?
The Pensions Ombudsman
The answer seems to be no, as demonstrated in a recent Pension Ombudsman's decision brought by Coker Engineering Limited (the Company).
In short the Company put in place its auto-enrolment solution with a provider. It wasn't particularly happy with the service provided due to issues with contribution calculation and administration charges, and its staff were not happy either. It sought to switch to an alternative provider (over several months) and things weren't working out with the provider holding on to the pension contributions from the Company and its employees for seven months rather than co-operating with the transfer.
The Ombudsman's decision
The Company complained to the Ombudsman citing maladministration by the provider. The provider did not respond to the complaint (which is error number one with the Ombudsman's procedure) and the result of all this was that the Ombudsman ordered the provider to:
- reconcile and confirm the contributions held for the Company's employees;
- arrange for the relevant employee funds to be transferred to the new provider;
- waive all termination fees (which had been offered by the provider previously); and
- pay £500 to the Company for the maladministration.
The Pensions Ombudsman is set up to hear this sort of complaint and it can provide a quick and simple way to deal with disputes of this nature. For smaller employers faced with issues with their pension provider it can be a very sensible way to deal with what can otherwise be a bit of a minefield.
It is worth noting in this case that the provider would probably have considered that they did nothing wrong but ended up on the wrong end of the decision. The big takeaway (other than a reminder that employers can bring Ombudsman proceedings) is that you ignore the Pensions Ombudsman at your own peril. Its decisions can be enforced as County Court judgments and, if you've missed your chance to argue the facts here, the chance of raising a point of law in an appeal is a bit of a forlorn hope most of the time.