This week’s insight covers the Parliamentary and Health Service Ombudsman’s findings that the Department for Work and Pensions (DWP) failed to adequately communicate state pension age (SPA) changes to women born in the 1950s and should remedy this through financial compensation, the Pensions Regulator’s (TPR’s) findings that the typical trustee is less diverse than the overall population, and that the Pensions Ombudsman will receive additional funding to reduce its backlog in cases.
DWP found to have inadequately communicated changes to women’s SPA and its failings should be remedied through financial compensation
The Parliamentary and Health Service Ombudsman’s final report that follows its July 2021 stage one finding that the DWP did not provide accurate, adequate and timely details of increases to women’s SPA to women born in the 1950s, concludes that the failings caused injustice which should be remedied through financial compensation. This compensation, which, based on the Ombudsman’s Principles for Remedy, could amount to a rather eye watering £3.5bn to £10.5bn use of public funds.
The report recognises that not every woman born in the 1950s will have been adversely impacted and that compensation can strike a balance between an appropriate response and a need to act proportionately. Nevertheless, the remedy should be fair.
The Ombudsman is clearly not happy with the way the DWP has responded so far. It says that the DWP has not recognised the findings, remedied matters, provided any apology or an account of the issue and has instead implied that it will not provide compensation. The Ombudsman refers to this as being ‘unacceptable’. As a result, the Ombudsman has “proactively asked Parliament to intervene and hold the Department to account”. Although Parliament will act independently as regards a remedy, the Ombudsman has provided details of what it believes would be appropriate.
We will now have to wait to see how Parliament will react to the report and how those impacted will be compensated. The indications from the report are that compensation amounts could well be significant.
TPR diversity & inclusion survey results reveal lack of diversity but ‘desire to improve’
On 19 March 2024, TPR published the results from its first trustee diversity and inclusion (D&I) survey which was carried out in summer 2023 – 2,197 trustees were involved. They reveal that:
- pension trustees are less diverse than the overall population, but half of responders felt their board was diverse on gender (58%) and age (49%) – this does not quite correlate with the data as only 24% were women (52% UK population) and 9% were under age 45 (44% UK population);
- the ‘typical trustee’ is a white man over age 45. Additionally, 53% had the same seven characteristics (male, cisgender, heterosexual, white, over 45, without a disability and either of a Christian faith or no religion);
- although there is a lack of diversity as regards protected or visible characteristics, the majority of trustee boards were viewed as diverse in other areas; skills (82%), life experience (74%), professional background (73%), cognitive diversity (73%) and education (61%);
- 78% of responders believed that diversity was important for trusteeship and over 80% said that D&I trustee boards were important for good decision-making, good governance and good member outcomes;
- despite recognising the importance of D&I, fewer than half of schemes have taken improvement steps – professional and corporate trustees tending to be the ones taking more action in this regard.
As noted by TPR, the results as regards a typical trustee will come as no surprise to the pensions industry. Ultimately, TPR wants “trustees to think about diversity more widely than just through more visible characteristics and consider their boards’ skills, life experience and cognitive diversity as well. Those wanting to improve their scheme’s board should take advantage of our latest guidance, which provides practical ways to improve board diversity and inclusion”.
TPR will use the survey results as a starting point to track progress towards trustee boards having high D&I standards.
The Pensions Ombudsman (TPO) to receive additional funding from the DWP to help reduce waiting times
In his 19 March 2024 written answer, the Pensions Minister has confirmed that the DWP will provide an additional £1,050,000 to The Pensions Ombudsman in 2024/25 to help it reduce waiting times for casework. Additional funding has been provided since 2022/23 (£750,000 - £2,698,347 in 2023/24) and this has helped reduce the backlog of cases. The funding will be welcomed by TPO – its 2022/23 annual account acknowledged that waiting times are too long and that reducing them is a ‘key focus’.