More than half (57 per cent) of pension professionals have experienced member-related issues during or after a risk transfer project, according to a survey from Sackers.

The survey found that most respondents had encountered member issues, including concerns about covenants, individual benefit queries, changes to discretions, non-payment of discretionary increases, and the use of scheme surplus.

Sackers partner, James Bingham, warned that risk transfer exercises could expose historic issues and create new challenges for trustees and employers.

“There are a number of different issues that can arise, but when you look at the underlying issues, the common theme for many member complaints is about trustee decision-making," he said.

Bingham noted that members increasingly wanted to understand how trustees reached decisions, including whether relevant factors were considered, the rationale behind them, and the steps taken during the process.

He therefore stressed the importance of clear and timely communication with members.

“Trustees should look to engage with members clearly and at an early stage where appropriate, outlining the process and rationale, while also being careful not to disclose information prematurely,” he continued.

“It is important to consider what a member is entitled to see or receive, rather than simply providing everything that is requested.”

The survey also found that 93.51 per cent of respondents would consider it problematic if a scheme had to go to court or deal with a Pensions Ombudsman complaint during a risk transfer project.

However, Bingham said court proceedings should not automatically be seen as detrimental to a transaction.

“In the right circumstances, a definitive ruling can provide certainty, be binding on the relevant members and allow trustees to deal with the issue authoritatively going forward," he argued.

He added that a court hearing could also provide a more certain timetable than an Ombudsman process and potentially be accommodated alongside an existing transaction timetable.

Where trustees expect complaints to arise, Bingham said it could also be appropriate to engage with the Ombudsman at an early stage.

“The key is to think carefully about the potential issues and how they should be addressed, rather than allowing them to become a distraction from the wider transaction,” he concluded.

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