Under section 50 of the Pensions Act 1995, trustees or managers of occupational schemes must ensure there is an internal dispute resolution (IDR) procedure in place for those with an interest in the scheme to apply for a decision on a matter in dispute. The two-stage procedure required at the moment has been found cumbersome.

Amendments in s.273 PA 2004 provide the opportunity for schemes to simplify their procedures. However the changes, which involve a completely new s.50 plus new sections 50A and 50B, will not have effect until s.273 is commenced in April 2008. (It is also important to be aware that s.273 has itself recently been amended by s.16 PA 2007).

In the interim the DWP has launched a consultation on draft regs [PDF] (The Occupational Pension Schemes (Internal Dispute Resolution Procedures Consequential and Miscellaneous Amendments) Regulations 2008) to supplement the primary legislation. The consultation closes on 18 December 2007.

The Regs are expected to be made and laid early next year, to come into force in April 2008. They revoke and replace the 1996 IDR regs (SI 1996/1270). Matters covered are:

• A requirement to include details of the Pensions Advisory Service (TPAS) and the Pensions Ombudsman with the notification of any decision;
• An exemption from the requirement to provide an IDR procedure for schemes where the sole trustee is a company, and all the members are directors of the company. This provides an exemption equivalent to s.50(8)(a) (as amended) for schemes with corporate trustees;
• Additional exemptions for certain specific disputes involving the new Firefighters' and Police Pension schemes;
• Transitional provisions to ensure any complaints already being dealt with when the new legislation comes into force will be dealt with under the arrangements in place when the complaint was made; and
• Some minor amendments to update regulations covering disclosure of information and the Pensions Ombudsman.

In essence the revised IDR provisions are designed to replace the current two-stage procedure, with its strict time limits for action and decisions, by something simpler and more flexible. Trustees will be able to keep their existing two-stage procedure, but can instead adopt a simpler single-stage process if they think that best suits their scheme.

Although the changes take away the rigid and inflexible time limits, trustees will be required to issue decisions within a reasonable time. What the Pensions Regulator (TPR) thinks is reasonable is set out in a draft Code of Practice published simultaneously with the Regs for consultation. This is mandated by s.90(2)(a) PA 2004.

"Dispute Resolution – reasonable periods" [PDF] sets out TPR's expectations that:

• Disputes being considered by trustees or managers will be decided upon, and the applicant notified of the decision, within 4 months of them receiving the application;
• Applicants should be notified of the decision usually no later than 15 working days after the decision has been made;
• Trustees or managers may choose to adopt a procedure with a shorter decision and notification than 4 months if they wish.

The Pensions Regulator recognises there will inevitably be circumstances when it proves impossible to complete the procedure within the reasonable periods. Trustees and managers must be satisfied that the time taken is relevant to the situation and they have taken appropriate action to try and meet the timescales. In some cases, on the other hand, it may be possible to respond sooner, and where this is the case TPR would expect the decision not to be delayed.

Responses to the consultation should be submitted by 19 December 2007.