The Pension Ombudsman has introduced fixed amounts for non-financial injustice redress, which occurs when people suffer distress during the complaints handling process.
With five categories – nominal, significant, serious, severe and exceptional – the new fixed amounts will vary between no award and more than £2,000.
The goal of the new amounts for the ‘distress and inconvenience’ awards is to enhance transparency, create consistency and manage expectations for all parties to the complaint, the Ombudsman said.
The Pension Ombudsman explained when assessing non-financial injustice redress, it considers factors such as how well the respondent handled a complaint, whether maladministration took place on one or several occasions, if there were delays from those dealing with the complaint and the level of distress or inconvenience caused.
Individuals found to have suffered a significant case of injustice will be awarded £500, serious cases will receive an award of £1,000, rising to £2,000 for severe cases.
The redress level for significant and serious cases remains the same as previously, but the upper limit for severe awards has been increased, with the goal to better differentiate between serious and severe cases.
Exceptional cases of non-financial injustice can receive compensation of more than £2,000, which has occurred with recent cases, the Ombudsman said.
However, the Pension Ombudsman clarified if an offer of redress has been made before or during an investigation, it won’t normally add to it.
It also noted that the non-financial injustice awards are intended to "remedy the injustice genuinely suffered – not to penalise or punish the respondent for bad behaviour".
However, if a respondent persists to make it difficult for members to achieve redress and causes more anxiety, this is likely to result in a higher award, it warned.
Redress in these cases is unlikely to be given if the scheme has limited resources or is underfunded, or in a process of being wound up or transferred to the Pension Protection Fund (PPF).
FTAdviser reported in August that the Pensions Ombudsman will restructure the way it processes cases, in a bid to cut the time it takes to complete an investigation.