Department of Public Expenditure & Reform v Pensions Ombudsman
| Jurisdiction | Ireland |
| Judge | Ms. Justice Baker |
| Judgment Date | 27 November 2015 |
| Neutral Citation | [2015] IEHC 792 |
| Docket Number | [2014 No. 382 MCA] |
| Court | High Court |
| Date | 27 November 2015 |
IN THE MATTER OF AN APPEAL PURSUANT TO SECTION 140 OF THE PENSIONS ACT 1990 AS AMENDED BY THE PENSIONS (AMENDMENT) ACT 2002
[2015] IEHC 792
[2014 No. 382 MCA]
THE HIGH COURT
Employment – S. 140 of the Pensions Act 1990 as amended by the Pensions (Amendment) Act 2002 – The Universities Act 1997 – Recoup of pension benefits – Change in contract of employment
Facts: The appellants had appealed the decision made by the respondent that the notice party was entitled for full pension and statutory discretion of the Ministers could not be exercised in case of the notice party as he had not retired early under the relevant scheme for securing pensions on retirement and other benefits.
Ms. Justice Baker dismissed the appeal. The Court held that it had limited jurisdiction in hearing an appeal from the quasi-statutory bodies and it would not interfere with the findings arrived at by the expert bodies unless there was a manifest error of law. The Court found that the decision given by the respondent was apt, cogent and based upon fact finding of maladministration by the appellants. The Court found that since there was a change in the contract of employment of the notice party and agreement in writing by the appellants to pay him full pension at the age of 60, the subsequent decision of the Ministers to recoup all the pension benefits given to the notice party in the wake of taking over the pension fund of the college would not apply to the notice party.
This is a statutory appeal under s. 140 of the Pensions Act 1990 (as amended) against a decision by the Pensions Ombudsman (‘the Ombudsman’) relating to the exercise of a statutory discretion by the Minister for Education and Skills and the Minister for Education and Reform (hereafter collectively ‘the Ministers’) in respect of the pension benefits of the notice party arising from his former employment as Secretary to Trinity College, Dublin.
The superannuation fund (‘the Scheme’) for Securing Pensions on Retirement and other benefits for employees of Trinity College (‘the College’) was established by an interim deed made on the 1st April, 1972, followed by a definitive deed of declaration of trust made on the 1st January, 1974 and certain general and special rules are thereby incorporated into the administration of the Scheme.
The normal retirement age for a member of the Scheme is 65 years, and general rule 4 sets out the nature of the benefits payable to a Scheme member, and provides at 4(a) that:
‘The amount or rate of any such benefit shall, subject to the aforesaid provisions, be as set out in the Special Rules.’
The special rules, by amendment made by deed of the 23rd May, 1986, provide at special rule 1(b) as follows:
‘Provided further that if a Member can complete at least 30 years” Service by his 65th birthday, the Employer may with the consent of the Member, decide that his Normal Pension Date shall be the 30th September coincident with or immediately following his 60th birthday.’
General rule 4(b) gives power to the trustees to augment the pension benefits of any member, and there are no substantive restrictions on the exercise of that discretionary power. However, the augmentation may be done only with the consent of the ‘principal employer’. This rule was the focus of much argument in this case, and provides as follows:
‘The Trustees may, with the consent of the Principal Employer, augment any of the benefits including pensions in payment to which any person may be entitled under the Rules.’
In 2002 the trustees became aware that the Scheme was underfunded, and determined that, as a matter of general policy and in order to preserve the sustainability of the fund, augmentation would not be permitted unless the increased benefits would be cost neutral to the Scheme.
In subsequent years, the level of deficit had reached a critical state and negotiations with the Department of Public Expenditure and Reform, the Department of Education and the Higher Education Authority led to an agreement in 2008 that the State would take over the pension fund of the College. Following the enactment of the Financial Measures (Miscellaneous Provisions) Act 2009 (the ‘Act of 2009’), the transfer of the assets of the Scheme, comprising €279 million, was made to the National Pensions Reserve Fund by S.I. 527/2009 on the 31st December, 2009, and at that date the liabilities of the Scheme were calculated to be €595 million.
By virtue of ss. 11 and 12 of the Act of 2009, the Ministers now have the power to exercise any discretion previously exercised by the trustees under the scheme.
Mr. Gleeson reached an agreement in 2005 that he be permitted to retire on full pension at aged 60. For that purpose, the sum of €544,000 was transferred to the Scheme by instalments commencing on 15th April, 2005, Messrs. Mercers, the Scheme actuaries, having identified the exact amount required to effect a cost neutral augmentation of the pension entitlements of Mr. Gleeson.
Mr Gleeson retired on the 31st July, 2011 when he reached the age of 60 and between 1st August, 2011 and 9th November, 2011, he was paid a full pension of €92,153 per year. Prior to his retirement, the Ministers had advised the College that it was not permitted to pay to Mr. Gleeson what they described as ‘the augmented pension’, and that Mr. Gleeson was not to be paid a pension as if he had continued in employment with the College up to the age of 65. The College responded saying that, as it had already made a decision to ‘augment’ the pension of Mr. Gleeson under the Scheme, and as this had been done in 2005 before the assets of the Scheme were transferred under the Act of 2009, that the decision with regard to the amount of benefits to which Mr. Gleeson was entitled did not lie with the Ministers.
On 9th November, 2011 the College was directed to adjust the pension of Mr Gleeson and to recoup excess amounts paid to him so as to reflect what was regarded by the Minister as an ‘early retirement’ in respect of which an actuarial reduction was required to be made. Following the reduction in his benefits to the annual sum of €71,674, Mr Gleeson appealed.
As is mandated by the provisions of the Universities Act 1997, a decision in respect of the pension of a Scheme member must in the first instance be appealed to the Higher Education Authority (the ‘HEA’). Certain observations were made by the notice party with regard to the appellate role of the HEA but that point did not come to be argued before me.
Mr Gleeson appealed the determination of the Ministers to the HEA on 19th December, 2011 and its decision rejecting his appeal was delivered on 24th July, 2012.
By notice of appeal dated 25th July, 2012 Mr Gleeson then appealed to the Ombudsman who delivered his determination on 24th June, 2014 allowing the appeal. The Ombudsman determined that the statutory discretion of the Ministers did not fall to be exercised in respect of Mr Gleeson, as the trustees had already made the relevant determination in 2005 before that discretion became vested in the Ministers.
It is from that determination of the Ombudsman that this is appeal is brought. The appellants argue that the Ombudsman fell into serious and significant error in his conclusions, and in particular that he made a fundamental error of law in that he wrongly interpreted the requirements of the Scheme rules, and that, having found what he described as ‘maladministration’ in the decision making of the College, and that in 2005 formalities were not sufficiently observed, that he impermissibly nonetheless decided in favour of the notice party. In particular it is said that it was not open to the Ombudsman, on the basis of the findings he has made, to come to the view that the appeal be allowed.
Until 2005 Mr. Gleeson had been employed in a senior role in the College as Secretary, but in the context of a reorganisation of the administrative structure of the College he agreed changes to his job specification, and took on instead the role of Director of Strategic Initiatives. The revised contractual arrangements were negotiated directly between himself and John Hegarty, the then Provost of the College. Part of the agreed revised job specification was that Mr. Gleeson would be entitled to retire on full pension from the date of his 60th birthday. By letter of the 15th July, 2005 to Mr Gleeson, the Provost confirmed in writing the agreed ‘significant changes to your job specification’, and that he was happy ‘following appropriate consultation’ to agree to the proposed changes. The third paragraph of this letter is central to the question before me and I quote it in full:
‘For the avoidance of doubt, you will be entitled to full pension (i.e. two thirds of retiring salary and the options already existing under the Scheme) from the date of your 60th birthday. If you seek earlier retirement, it will be subject to the provisions of the Plan. If you leave office before age 60 with a deferred pension, the pension payable at 60 will be based on service of 40 years less the difference between the age of departure and 60 years.’
In accordance with the request in the letter, Mr. Gleeson endorsed his signature on the enclosed copy and the letter provided that the acceptance would ‘constitute part of your contract of employment’. As noted at para. 9 above, a substantial capital payment had been made to the Scheme in respect of the revised pension arrangements....
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Vidette Molyneaux v Financial Services and Pensions Ombudsman
...the same. This approach was endorsed by the High Court (Baker J.) in Department of Public Expenditure and Reform v. Pensions Ombudsman [2015] IEHC 792 (at paragraphs 21 to 25). See also the judgment of the High Court (Barrett J.) in Minister for Education and Skills v. Pensions Ombudsman [2......