Compensation for distress and inconvenience – where are we now?

Amy Priestley

Pension schemes are complex and even the best-run schemes have to deal with complaints. When advising on complaints being considered under a scheme’s internal dispute resolution procedure (IDRP), I’m often asked ‘should we offer compensation?’ and, if so, ‘how much?’.

It’s been around six months since the Pensions Ombudsman (TPO) revised his guidance in this area and introduced fixed amounts for distress and inconvenience (D&I) awards where the D&I is caused by maladministration. TPO’s aim is to enhance transparency, create consistency and manage expectations for all parties to the complaint. Since the revised guidance was issued, TPO has made awards of up to GBP3,000. The usual awards are still GBP500 or GBP1,000. Trustees are still able to offer an award at what they consider to be an appropriate level (eg GBP750) and are not strictly bound to offer only one of TPO’s ‘fixed’ awards. However, trustees should take the revised guidance into account when dealing with ongoing and future member complaints. We’re likely to see further developments in the area of dispute resolution soon, as the government has recently consulted on TPO’s processes and in particular the early resolution of disputes.

You can find out more about recent compensation awards for D&I, including take-away points for trustees and administrators, in our new publication How the Pensions Ombudsman awards compensation for distress and inconvenience. Other resources to help you avoid, handle and resolve disputes include our quarterly Pensions in Dispute publication and the online toolbox of resources on our Pensions in Dispute website.

“Amy Priestley is an associate at Allen & Overy”

Comments published on Pensions Talk do not necessarily reflect the views of Allen & Overy or its clients.

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