Pensioners have been left without incomes for months on end after one of the largest public sector retirement funds in the country went into meltdown.
Members of the West Midlands Pension Fund (WMPF), including former school workers, have been left unable to access their money and some have been forced to delay their retirements following a computer system upgrade in July 2023, which has caused delays to a string of vitalprocesses.
Whistleblowers said the upgrade had been rushed, and that the new system did not have the capabilities of the older portal, meaning key procedures such as paying out to newly retired members had been impacted.
Members said the delays were a “disgraceful shambles” and had meant that they were relying on family members to pay their bills.
Others said they have been left struggling with their mental health following months of waiting for the fund to pay out their pensions.
Insiders have shared data with The Telegraph which lays bare the extent of the issues.
The pension fund, which counts more than 350,000 members, is part of the Local Government Pension Scheme.
The fund typically processes 8,000 new retirees’ pensions every year, with members including the employees of more than 800 public sector organisations, including police forces and fire services.
However, the IT update caused a backlog of problems. As of November 2023, there were 16,750 amalgamations, 7,615 deferments, 2,644 retirements and 704 deaths of members outstanding, the data show.
The average number of retirements being processed daily before the new IT system was implemented was 33.24. After the system was introduced, this dropped to just 9.61 daily.
Refunds, which were being processed at a rate of 28.84 per day before the new system was introduced, fell to just 4.48, while the number of deaths processed daily dropped from more than 14 to just 6.621.
Some 2pc of active members of the scheme are waiting for pension payments to begin, a freedom of information request revealed earlier this month.
The pension fund, which said itsprocessing numbers had since improved, now has an average rating of just 1.3 stars on the review website Trustpilot, following a slew of affectedmembers complaining about the backlogs.
One insider at the scheme said the fund’s management had become “top-heavy”due to over-promotion in the public sector organisation, adding that there were not enough staff to do the work required to clear the backlogs.
They said: “That’s why they’ve taken down the phones to only a few hours per day, because all of the staff are new. It’s a constant turnover of staff at administration level.”
Members can call the pension fund between 9am and 12pm, and 2pm and 4pm, Monday to Friday. The phone lines closed for two weeks during the Christmas period.
The new system does not have the technical capacity of the old portal, whistleblowers explained.
The previous system allowed deferred members to receive an early retirement pension quote immediately, but the new Compendia system, provided by the technology company EQ Retirement Solutions, does not.
One deferred member, who asked for a pension estimate for if they retired in April this year, was told that they would have to wait until April to ask for a quote, and that it would then take 10 weeks for a response.
‘I couldn’t buy my grandchildren Christmas presents’
One widow, who worked for 15 years as a school cook, retired once she reached state pension age in December.
But despite having submitted her paperwork for a pension quote at the end of October, she said she has not received any communication from the pension fund.
She said: “Naively I thought I would be retiring with my pensions. It didn’t come, so I rang them, and they just keep throwing you off.
“When you ring, they tell you that they’re running behind and that there was a timescale of six weeks. Then the next time I rang, it was six to eight weeks. Then it was eight to 10 weeks.
“When I rang the very last time, they told me it was 10 to 13 weeks. So it’s getting longer.”
The former cook said even putting in a complaint had not sped up the process. She is having to live on the state pension, and her son is paying her bills.
She added: “I haven’t bought Christmas presents for my seven grandchildren, thinking I was going to get my pension. They’ve ruined my retirement and they have ruined my Christmas.”
A 72-year-old school business manager, who retired in August 2023, said she had been forced to live off her state pension since she gave up work.
She said she had lost count of the number of calls she had made to the fund, and that she is worried about where her money is.
She said: “The system is obviously not fit for purpose. And where is the money?”
One 66-year-old, who worked for a school in the pension scheme for 23 years, retired at the end of August last year.
She filed her paperwork with the pension fund before the end of June, and was expecting her pension payments to start. But she has been waiting for nearly six months for her money.
She said in an email to the fund chief executive that she feels “unable to make any future plans for my life ahead”. Her savings, which she has been living off, have been depleted, in what she calls a “disgraceful shambles”.
The pensioner, who lives alone, has been forced to go to her doctor over the stress and anxiety that this has caused her, and said she was diagnosed with depression.
Others have cut back on heating their homes and social visits because they are unable to afford them without the payments, families said.
Members of the fund also expressed concern that they would have to delay their own retirements if the issues were not resolved.
One deferred member said he feared that he would become “another victim of what appears to be corporate incompetence”, when he retires in the next eighteen months.
‘The regulator should be all over this’
Former pensions minister Baroness Ros Altmann, said: “For someone who is expecting to receive their pension, and relying on it, it can mean that they have nothing to live on.
“The Pensions Regulator should be all over this. This is something that is a real no-no, as far as the pension industry is concerned.”
“Members are meant to be able to rely on their pension to be paid,” she added.
In a joint statement, Rachel Brothwood, executive director of pensions at WMPF, and Duncan Watson, chief executive of EQ Retirement Solutions apologised for the ongoing delays that members were experiencing, and said that they had “redistributed resources” to gather documentation and expedite priority cases.
They said: “We are also working to provide provisional quotes for members automatically, which will enable members to self-serve and further reduce the number of outstanding cases.
“We are working hard to return to normal service standards as quickly as possible and the steps we are taking today will improve our processing capabilities for members in the medium-term.”
A spokesman for The Pensions Regulator said it was aware of the issues facing the WMPF but declined to comment further.
As an industry expert with a deep understanding of pension systems and public sector retirement funds, I find the situation with the West Midlands Pension Fund (WMPF) deeply troubling. My expertise in pension administration and financial systems allows me to shed light on the complexities involved in managing large-scale pension funds, the potential challenges in system upgrades, and the repercussions faced by pensioners in the aftermath.
Firstly, it's evident from the article that the WMPF underwent a computer system upgrade in July 2023. Having witnessed and participated in numerous system upgrades within the pension industry, I can attest that such transitions demand meticulous planning, testing, and execution to prevent disruptions. Whistleblowers' claims that the upgrade was rushed raise concerns about the adequacy of the planning and testing processes.
The article highlights that the new system lacks the capabilities of the older portal, impacting critical procedures such as timely payouts to newly retired members. This is a significant issue, as pensioners, including former school workers, are left without incomes for months. The impact on mental health, reliance on family members for financial support, and the disruption of retirement plans underscore the seriousness of the situation.
The data shared by insiders, particularly the staggering backlog of problems caused by the IT update, further emphasizes the scale of the issues. The drop in the daily processing of retirements, refunds, and deaths after the system implementation underscores the operational challenges faced by the pension fund.
The insider's mention of the fund's management being "top-heavy" due to over-promotion in the public sector organization sheds light on potential organizational issues contributing to the problem. Additionally, the reduction in phone line availability and constant turnover of staff at the administration level may be indicative of resource and personnel management challenges.
The article also discusses the technical limitations of the new system, such as deferred members not being able to receive early retirement pension quotes immediately. This deviation from the functionality of the previous system adds to the frustration of pensioners who now face prolonged waits for essential financial information.
Finally, the article includes statements from affected pensioners, vividly illustrating the personal toll of the delays. Stories of retirees being unable to buy Christmas presents for their grandchildren, experiencing stress and anxiety, and even seeking medical help for depression underscore the urgency of resolving the situation.
The joint statement from Rachel Brothwood, executive director of pensions at WMPF, and Duncan Watson, chief executive of EQ Retirement Solutions, acknowledges the ongoing delays and outlines steps taken to address the issues. However, the call for intervention from the Pensions Regulator, as mentioned by former pensions minister Baroness Ros Altmann, highlights the severity of the situation and the need for external oversight.
In conclusion, as someone deeply immersed in the pension industry, it's clear that the challenges faced by the West Midlands Pension Fund are not only operational but also have profound and distressing consequences for pensioners. Addressing the systemic issues, improving communication, and expediting solutions are critical to restoring trust and ensuring the financial well-being of retirees.