The government has confirmed that The Pensions Ombudsman (TPO) will have an independent arm’s-length body review in autumn 2024, after MPs previously raised concerns that there are gaps in the route of appeal available for people raising pension complaints.

The Public Accounts Committee (PAC) recently undertook an inquiry on the Atomic Energy Agency (AEA) Technology scheme, highlighting the case as "another case of government not giving people enough time or support to make complex financial decisions".

The committee's report also found gaps in the routes of appeal available for pension complaints, recommending that the government should ombudsman arrangements to ensure that people’s interactions with their pensions have an adequate route of appeal.

The government has since agreed with this recommendation, confirming that TPO is scheduled to have its independent arm’s-length body review in autumn 2024, as part of the Cabinet Office review programme and in accordance with the Partnership Code of Good Practice.

The review is expected to provide a "robust challenge" on the governance, accountability, efficacy, and efficiency of the arm's-length body, although the department can request that the independent reviewer considers other areas.

However, the government clarified that TPO currently has "significant powers" to deal with complaints of maladministration and disputes of fact or law, and that TPO’s current time limits give the ombudsman a "wide level of discretion", subject to the Limitation Act 1980 restrictions.

The government also agreed with the committee in other areas, confirming plans to write to the PAC by September 2023, to explain the action it is taking to support people to make informed decisions about their pensions by encouraging the use of appropriate advice and guidance and reducing the complexity of decisions savers are required to take.

The government also highlighted the importance of recent progress on the pensions dashboards reset, noting that new regulations were made on 19 July 2023, introducing a new approach designed to allow the government to work more collaboratively with the pensions industry.

"The government remains as committed as ever to making pensions dashboards a reality and is ambitious about their delivery," it stated.

"The government is confident that this re-appraised approach will enable it to make significant progress on delivering dashboards safely and securely, enabling consumers to take advantage of their benefits to plan for retirement."

However, the government rejected some of the PAC's broader recommendations, arguing that they were "policy matters".

In particular, the PAC had recommended that the government review whether the current rules for increasing Pension Protection Fund (PPF) compensation for inflation are appropriate, with specific consideration as to the costs and benefits of extending the rules so that benefits accrued before April 1997 are also increased for inflation and, separately, of raising the cap for annual increases above 2.5 per cent.

However, the government disagreed with this suggestion, emphasising that PPF indexation rules are set out in the Pensions Act 2004, and would require a change in legislation, and is therefore a policy matter.

In addition to this, the government rejected the recommendation to ensure that members' complaints about the AEAT pension case can be independently reviewed, on the grounds that this is a "policy matter".

It stated: "Complaints on this matter have been considered by relevant government bodies, including TPO (and the Parliamentary and Health Service Ombudsman), and decisions on these complaints including whether they are able to investigate them have been taken according to the remits given to them by parliament and other broader statutory constraints.

"The department cannot respond further on this matter as changing the remit of an ombudsman would be a policy matter."

More broadly, the government also emphasised that the 2013 Fair Deal policy means that the specific circumstances of this case would not happen again, as in cases of privatisation the pensions would now be expected to remain in public sector schemes.

Issues around the AEA scheme first arose after the commercial arm of UK AEA Technology was privatised in 1996, meaning that its employees could no longer pay into the public sector pension scheme.

According to the National Audit Office (NAO), nearly 90 per cent of members chose to transfer their accrued benefits to the new scheme following information provided by public bodies, with legislation at the time requiring transferred pension to have no less favourable benefits within the new scheme.

However, the AEA Technology faced financial difficulty and restructured in 2012, with the scheme subsequently entering the PPF, and members left with lower benefits than the previous scheme.

Since then, according to the NAO, scheme members have raised complaints and sought redress from several parts of government.

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