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Dispute resolution procedures

Important

Early draft of the code of practice

This code is not in force yet. It is an early version for the new code of practice consultation.

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You can also read more information about the consultation.

Published: 17 March 2021

Governing bodies must put in placeDI1 formal procedures and processes to investigate and decide upon pension scheme disputes quickly and effectively. This applies to governing bodies of all occupational pension schemes, subject to certain exemptions.DI2

Dispute procedures play a key role in the effective governance and administration of a scheme and need to follow the legislative requirements.DI3 The documents setting out the operation of the scheme may refer to internal dispute resolution arrangements.

Governing bodies must follow the dispute procedure to resolve various matters.DI4 Dispute procedures may be used to resolve other disputesDI5 where alternative arrangements do not exist.

Where a person with an interest in the scheme is not satisfied with any matter relating to the scheme (for example a decision that affects them), they have the right to ask for a review of the matter.

Governing bodies must ensure their scheme's procedures allow a reasonable period, which should be at least six months, for certain peopleDI6 or their representativesDI7 to make their applications. The six-month period should normally start immediately after the date on which the person ceased to be, or claims they ceased to be, a person with an interest in the scheme. Governing bodies can accept an application outside of this timeframe, if they believe it is appropriate.

In relation to dispute resolution processes, governing bodies must:

  • provide their internal dispute resolution procedure to:
    • prospective members, if it is practicable to do so
    • any scheme members who have not been given the information
    • certain people who request the information and who have not been given that information in the previous 12 months
    • members or prospective members when schemes receive jobholder information, or when a jobholder becomes an active member, in connection with automatic enrolment
  • provide information about the Money and Pensions Service and the Pensions Ombudsman at certain stages of the dispute

Governing bodies should:

  • agree on any details of their dispute resolution process that are not set out in law
  • provide contact details for matters relating to disputes
  • regularly assess the effectiveness of the dispute procedure
  • be satisfied that those following the process are complying with the requirements set, which includes effective decision-making
  • include in the internal dispute resolution procedure the information they are likely to need from applicants to reach a decision on a disputed matter
  • consider the circumstances under which advice may be required to reach a decision on a dispute
  • ensure they make the following information available to applicants:
    • the process to apply for a dispute to be resolved
    • the information that an applicant must include
    • the process by which any decisions are reached

In relation to reasonable time periodsDI8 governing bodies should:

  • decide the matter in dispute within four months of receiving the application
  • in the case of a two-stage dispute resolution procedure, reach a first stage decision within four months of receiving the application
  • in the case of a two-stage dispute resolution procedure, reach a second stage decision within four months of the point when the governing body receives the referral
  • notify applicants of the decision no later than 21 days from when it is made
  • not delay a decision where it is possible to process an application sooner than four months
  • allow more than four months to reach a decision if it is appropriate to do so

When reviewing an application, decision makers should:

  • ensure they have all the appropriate information to make an informed decision
  • request further information if required
  • be satisfied that the time and action taken to reach a decision and notify the applicant are appropriate to the situation, and be able to demonstrate this

Informing members

It is good practice for governing bodies to keep members informed about dispute resolution, this may include:

  • publishing and making readily available details of the time limits within which someone with an interest in the scheme must make an application
  • making their procedure accessible to members and potential applicants, for example by publishing them on a scheme website and in the joining booklet
  • keeping applicants advised of the progress of their dispute and let them know when they are likely to receive an outcome

Legal references

DI1Section 50(1) of the Pensions Act 1995
[Article 50(1) of the Pensions (Northern Ireland) Order 1995]

DI2Section 50 (8) of the Pensions Act 1995
[Article 50(8) of the Pensions (Northern Ireland) Order 1995]

DI3Section 50 of the Pensions Act 1995
[Article 50 of the Pensions (Northern Ireland) Order 1995]

DI4Section 50(3) of the Pensions Act 1995
[Article 50(3) of the Pensions (Northern Ireland) Order 1995]

DI5Section 50(9) of the Pensions Act 1995
[Article 50(9) of the Pensions (Northern Ireland) Order 1995]

DI6Section 50A(1)(e) & (f) and Section 50B(3) of the Pensions Act 1995
[Article 50(1)(e) & (f) and Article 50B(3) of the Pensions (Northern Ireland) Order 1995]

DI7Section 50B(3) of the Pensions Act 1995
[Article 50B(3) of the Pensions (Northern Ireland) Order 1995]

DI8Section 50(5) of the Pensions Act 1995
[Article 50(5) of the Pensions (Northern Ireland) Order 1995]