The Pensions Ombudsman (TPO) has outlined plans to tackle the rising and "unprecedented" demand for its services, including looking for new and innovative ways to tackle the growing funding gap it is facing.

TPO's new Corporate Strategy for 2025-2028 argued that while the quality of the ombudsman's work is of a "very high standard", it is aware that customers are currently waiting "too long" to reach the end of the process.

And whilst the Operating Model Review (OMR) programme has been successful, delivering a number of improvements in 2024, TPO admitted that, with demand for help continuing to outstrip both expectations and capacity, there is still more to do.

The three-year strategy is therefore designed to build on the progress made by the OMR programme, continuing to find new ways of making us more efficient, reducing bottlenecks and limiting demand for services.

It is focused on two strategic goals: providing an efficient, accessible and quality service, and being an authoritative voice for improvement in the pensions industry, using TPO's expertise and data to drive improvements in pension administration and complaint handling across the sector. 

The first goal will continue to build on the achievements already realised by the successful OMR programme and look for additional efficiencies, which include exploring the use of artificial intelligence (AI) for administrative tasks but not for decision-making.

"With optimised processes, we then need to make the most of the opportunities artificial intelligence (AI) and automation give us, allowing our skilled staff to focus on decision making," pensions ombudsman, Dominic Harris, said.

"While I do not envisage digital solutions playing a role in decision-making, I can see the value of AI, for example, in summarising and packaging complaints for me and my team to resolve cases more swiftly."

However, the ombudsman's forecasting suggested that the efficiencies TPO is looking to make are likely to be overtaken by the increasing demand for its service.

Indeed, TPO's three-year strategy predicted that 2025/26 could see a 12 per cent increase in new pension complaints, with a further 12 per cent increase expected in both 2026/27 and 2027/28, respectively.

Given this, the second goal focuses on reducing the number of complaints TPO receives by improving schemes' internal dispute processes, providing guidance and information about TPO’s approach to key issues with the pensions industry, and helping pension members understand how to manage their issues effectively and where to go for help.

TPO's Corporate Plan 2025/26 provided more details on the specific priorities for the current year, confirming that the OMR is set to deliver a further 15 per cent in efficiencies over the next three years, which will equate to the ombudsman closing around 1,000 extra cases by 2027/28 compared to 2024/25.

As part of this work, TPO will be looking to ensure that it makes the best use of its skills and experience, as well as reviewing and improving its website user journey and application form to improve usability and reduce invalid applications.

It will also continue to implement changes following the review of its thresholds for accepting complaints, ensuring it is able to focus resources where they are most needed.

In addition to this, it will undertake a further review of its case handling processes with a particular focus on jurisdiction decisions, with the aim of minimising case handling times and reducing the number of handovers.

However, former ombudsman and interim chair, Anthony Arter, argued that, in addition to operational efficiencies and improvements in how it works with the pensions industry, further funding will also be required, "as demand is expected to continue to outstrip both our resources and the increased efficiencies we expect to deliver".

Given this, TPO confirmed that it is exploring opportunities to amend its funding model to see if there are alternative or complementary models of funding that are in line with its core purpose.

"We will also look for new and innovative ways to tackle the growing funding gap that we face and will be looking at all options to resolve this, including options for legislative change that will allow us to raise additional funding independent of the existing pensions levy," Arter stated in the foreword of the Corporate Strategy.

Some funding changes have already been seen, as TPO confirmed that, due to a change in the structure of our funding, it has been able to move away from having some staff on fixed-term contracts and is now able to recruit and invest in the development of permanent staff.

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