General Code Corner – Internal Dispute Resolution Procedure (IDRP)

An IDRP is part of a scheme’s core governing policies. However, is your scheme’s policy compliant with the statutory and General Code requirements?

Most occupational pension schemes are required to have an IDRP and it forms part of the scheme’s effective system of governance (“ESOG”).

In brief, a scheme’s IDRP should do what it says, set out a procedure for resolving disputes between scheme trustees or managers and current, past and prospective members and beneficiaries (“interested persons”) about matters relating to the scheme. In this blog, we use the term “trustees” to refer to the trustees or managers of a scheme.

Statutory requirements

Details to include in your IDRP

An IDRP must include:

1. details of how to make the complaint
2. the information that must be included in the application
3. the manner in which decisions are to be reached and given.

The IDRP must also set out the “reasonable period” in which decisions are reached and notified to applicants. However, trustees can set their own time frames.

It would also be useful to include the details of the person who will be handling the complaint (eg the pensions manager).

One-stage or two-stage IDRP

Trustees can choose to use a one- or two-stage IDRP.

• A one-stage process is a simpler method which allows the trustees to make the decision within a “reasonable period”.
• A two-stage process allows for an extra step before reaching the trustees. The initial review is carried out by a specified person (this might be a delegated sub-committee) which will reach a “stage one” decision. If the complainant is unhappy with the stage one decision, they can appeal to the trustees as stage two.

Which process is the most appropriate will depend on factors like the type and size of the scheme.

General Code Impact

The General Code provides further guidance on how trustees should provide IDRP information to members and others, how decisions should be reached and what is a “reasonable period” to reach a decision.

TPR’s expectations in the Code include that trustees should ensure members are kept informed about dispute resolution by:

• making details of time limits for applications readily available
• making the IDRP accessible by publishing it on a scheme website
• keeping applicants informed of the progress of their dispute.

TPR has also set out what it considers to be “reasonable periods” for different aspects of the process. Trustees should:

• decide the matter in dispute within four months of receiving the application
• in the case of a two-stage IDRP, ensure a decision is reached within four months at the first stage, and within a further four months at the second stage
• notify applicants of the decision within 21 days.

These timeframes are not set in stone: if a decision can be reached sooner, it should be. It may also be appropriate to take more time in some situations.

Three Top Tips

1. Accessibility: Make your IDRP readily available. Having the policy on the scheme’s website is a good place to start.
2. Evidence: Ensure decision-makers have all the appropriate information to make an informed decision, and if they don’t, ask for more.
3. Keep an eye on the clock! Keep applicants informed of progress of their dispute and let them know when they are likely to receive an outcome.

Next blog …

The subject of the next post in our General Code Corner series will be a spotlight on the conflicts of interest policy.

Please speak to your usual Sackers contact if you have any queries regarding the issues highlighted above.

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