Pension Disputes and the Pensions Ombudsman: A Practical Guide
Pension disputes arise more commonly than many people expect. Incorrect benefit calculations, delays in paying benefits, failures to implement transfer requests, maladministration of death benefit nominations, and alleged mis-advice about pension transfers are all among the complaints received by the two main bodies with jurisdiction over UK pension complaints: the Pensions Ombudsman and the Financial Ombudsman Service (FOS).
Understanding which body has jurisdiction, what the complaint process involves, and what outcomes are achievable is important for anyone with a grievance about their pension.
Types of Pension Complaint
Pension disputes fall into several broad categories:
Maladministration: The scheme or provider has failed to administer the pension correctly — errors in benefit calculations, failure to process transfers or benefit requests promptly, loss of records, or failure to respond to queries. This is the largest category of Pensions Ombudsman case.
Failure to pay or incorrect calculation of benefits: The pension paid differs from what the member is entitled to under the scheme rules, a historical error in benefit statement, or incorrect application of revaluation or indexation.
Investment decisions and fund allocation: Errors in investment selection, failure to switch funds as instructed, or allocation to the wrong fund. Note: the Pensions Ombudsman and FOS do not make judgements about whether investment strategies are "good" — they assess whether the scheme acted in accordance with its rules and the member's instructions.
Death benefit and nomination failures: Failure to pay death benefits to nominated beneficiaries, failure to update beneficiary records, delays in paying lump sum death benefits.
Transfer failures: Delays in processing pension transfers (both CETV payments to new schemes and QROPS transfers), incorrect transfer value calculations, or refusal to transfer in circumstances where the member is entitled to.
Pension scam disputes: Where a member claims they were misled into transferring their pension to a fraudulent arrangement, and seeks redress against the transferring scheme for failing to apply adequate due diligence (the Section 48 guidance appointment regime, scam flag checks).
Internal Dispute Resolution Procedure (IDRP)
Before escalating a complaint to any external body, pension scheme members are required to use the scheme's Internal Dispute Resolution Procedure. This is a statutory requirement under the Pensions Act 1995 (as amended).
The IDRP has two stages:
Stage 1: The complaint is reviewed by the scheme's trustees (for an occupational scheme) or the pension provider (for a personal pension). The trustees must appoint a specific decision-maker and issue a written response within a reasonable time — typically 2 months (though not mandated in statute for all scheme types).
Stage 2: If dissatisfied with the Stage 1 response, the member can request an independent review. In an occupational scheme, the Stage 2 reviewer is a trustee (or committee) who was not involved in Stage 1. The Stage 2 response must also be provided in writing with reasons.
It is only after exhausting both IDRP stages (or in cases where the scheme fails to respond within a reasonable time) that a complaint to the Pensions Ombudsman is accepted.
The IDRP process can take several months, and the written responses from Stage 1 and Stage 2 form part of the Pensions Ombudsman's investigation file.
The Pensions Ombudsman: Jurisdiction and Process
The Pensions Ombudsman was established under the Pension Schemes Act 1993. Its jurisdiction covers:
- Occupational pension schemes (trust-based, employer-sponsored)
- Personal pensions (insured, contract-based) — for maladministration complaints
- Public sector pension schemes
- The Pension Protection Fund (for disputes about PPF benefits or calculations)
The Pensions Ombudsman does NOT have jurisdiction over:
- Investment advice (whether to invest, what to invest in) — this falls to the FOS
- Regulated advice relating to pension transfers — FOS jurisdiction
- Disputes about annuity terms or insured product features — generally FOS
- SIPPs and personal pensions where the complaint is about investment products or financial advice — FOS
The Ombudsman can investigate maladministration and determine disputes about the legal rights of members under scheme rules.
Time limit: Complaints must generally be made within 3 years of the act or omission being complained about, or within 3 years of the date the complainant knew (or ought reasonably to have known) of the issue, whichever is later. There is discretion to accept complaints outside this period in exceptional circumstances.
Referral: Complete the online complaint form on the Pensions Ombudsman website (pensions-ombudsman.org.uk) and attach the IDRP Stage 1 and Stage 2 responses.
Outcomes: The Ombudsman can award financial compensation (to correct the financial loss and for distress and inconvenience — typically up to £1,000 for distress in straightforward cases, higher for serious maladministration), direct a scheme to take or refrain from a specific action, and make formal determinations that are legally binding.
The Financial Ombudsman Service: When It Applies to Pensions
The Financial Ombudsman Service (FOS) has jurisdiction over complaints about financial services provided by FCA-regulated firms. For pensions, this includes:
- SIPPs — where the complaint concerns the SIPP operator's conduct (not just underlying investment)
- Personal pensions and stakeholder pensions — where the complaint is about the pension provider's conduct, charges, or service
- Pension advice — complaints about regulated financial advice relating to pensions, including pension transfer advice
- Annuities — complaints about annuity providers and the open market option process
- Occupational pension scheme advisers — if the complaint is about advice given by an FCA-regulated adviser to a trustee
For complaints about pension transfer advice (including transfers to SIPPs, QROPS, or defined contribution schemes), FOS is the relevant body. Many high-profile cases of unsuitable defined benefit pension transfer advice fall within FOS jurisdiction.
Time limit: FOS complaints must generally be made within 6 years of the event, or 3 years of the date you knew (or ought to have known) you had cause to complain, whichever is later.
Compensation: FOS award limits are uprated annually in line with CPI. For complaints referred to FOS on or after 1 April 2026, it can award up to £455,000 for events on or after 1 April 2019, and up to £205,000 for events before 1 April 2019. These limits are reviewed each year.
PASA and Mediation
The Pensions Administration Standards Association (PASA) is a trade body that sets standards for pension administration. PASA's pension mediation service is an alternative dispute resolution option for pension disputes that do not fit neatly within Pensions Ombudsman or FOS jurisdiction, or where an informal resolution is preferred.
Mediation is voluntary — both parties must agree to participate. It is faster and less formal than a formal ombudsman investigation. PASA mediators are experienced pension practitioners. However, mediation outcomes are not binding unless a settlement agreement is reached.
The Financial Services Compensation Scheme (FSCS)
The Financial Services Compensation Scheme provides compensation where an FCA-authorised firm has failed (gone into insolvency or is unable to pay claims). For pension-related claims, FSCS covers:
- Pension advice claims — if the FCA-regulated adviser who provided pension transfer advice has gone out of business and their advice was negligent or unsuitable. FSCS compensation for bad pension advice is currently limited to £85,000 per claim.
- Pension provider failures — if a pension provider (SIPP operator, personal pension provider) fails, FSCS provides protection for certain categories of claim.
FSCS is the backstop where the firm cannot itself pay — it is not the first port of call for a live complaint against a solvent firm.
Practical Guidance for Raising a Pension Complaint
Document everything — gather all communications, benefit statements, transfer paperwork, and scheme correspondence before raising a formal complaint.
Use the IDRP first — write formally to the scheme trustees or pension provider, clearly stating your complaint and what resolution you seek. Keep records of all responses.
Note the time limits — 3 years from the event (or knowledge) for Pensions Ombudsman; 6 years (or 3 from knowledge) for FOS. Do not delay.
Identify the right body — if your complaint is about an occupational scheme trustee's actions, Pensions Ombudsman. If it is about advice, charges, or a regulated product, FOS.
MoneyHelper free guidance — MoneyHelper (formerly the Money Advice Service) can provide free initial guidance on pension complaints and help identify the appropriate route.
Legal advice — for large or complex cases (e.g., significant DB transfer loss claims), regulated legal advice from a pensions litigation solicitor may be appropriate.
Compliance Caveat
This guide is for general informational purposes only. Pensions Ombudsman and FOS jurisdiction, time limits, and compensation caps are subject to change. Nothing in this guide constitutes legal advice. If you have a specific pension complaint, you should seek independent legal or regulatory advice before taking action. The value of pension savings can fall as well as rise, and historical losses may not be fully recoverable.
How Global Investments Can Help
Global Investments works with clients who have complex pension arrangements, including those who have concerns about past pension transfers, SIPP investments, or benefit calculations. While we do not act as claims management companies, we can help you understand your position, identify the appropriate complaint route, and connect you with regulated legal professionals who specialise in pension disputes.
If you believe your pension has been mismanaged or you have received unsuitable advice, contact us to discuss the situation in confidence.
This guide is for general information only and does not constitute financial, legal or tax advice. Pension rules, tax rates and programme details change; verify current requirements with a qualified and FCA-regulated pensions adviser before acting. Pension transfers involving defined benefits over £30,000 require regulated advice.