Minister for Public Expenditure & Reform v Pensions Ombudsman
|Mr. Justice Noonan
|19 March 2015
| IEHC 183
|Judgment citation (vLex)
| 3 JIC 1905
|19 March 2015
 IEHC 183
THE HIGH COURT
Exemption – The Pensions Act 1990 – The FEMPI Act – Lack of jurisdiction
Facts: The applicant sought an order for annulment of the determination made by the respondent in favour of the noticed party against the refusal of the applicant to exempt or modify the reduction in private funded pension of the noticed party. The applicant contended that the respondent had no jurisdiction to review the decision of the applicant.
Mr. Justice Noonan held that an appeal under s. 140 of The Pensions Act 1990 would never lie because a minister is not a person responsible for the management of the NTMA pension scheme and it necessarily excludes the jurisdiction of the Ombudsman. The Court held that the respondent exceeded its jurisdiction both in taking up the investigation and making the determination.
JUDGMENT of Mr. Justice Noonan delivered the 19th day of March, 2015
1. This matter comes before the court by way of an appeal by the appellant ("The Minister") pursuant to s. 140 of the Pensions Act 1990 (as inserted by s. 5 of the Pensions (Amendment) Act 2002) against the determination of the Respondent ("the Ombudsman") made on the 18 th July, 2013 in respect of a complaint made by the notice party ("Mr. Farrell").
2. For much of his working life, Mr. Farrell was employed in the private sector until 1990, when he commenced employment with the National Treasury Management Agency ("the NTMA"). During his years working in the private sector, Mr. Farrell built up a private pension fund. In 1996, he was invited to join the NTMA Pension Scheme ("the Scheme") and in February of that year he transferred the entire proceeds of his private pension fund into the Scheme in return for an agreed pension entitlement.
3. Prior to transferring the private pension fund into the Scheme, Mercer, the NTMA appointed actuaries for the Scheme, certified that the benefits to be provided to Mr. Farrell consequent upon the transfer would not result in a cost to the Exchequer. Mr. Farrell's pension entitlement which resulted from the transfer amounted to 62.7% of his pension with the balance of 37.3% being attributable to his service with the NTMA.
4. Subsequent to Mr. Farrell's retirement, the Financial Emergency Measures in the Public Interest Act 2010 ("the FEMPI Act") was enacted. The effect of the statute was to bring about, from the 1 st of January, 2011, a sliding scale reduction in public service pensions ("the PSPR"), which included Mr. Farrell's pension.
5. In Mr. Farrell's case, this equated to a reduction of €22,929 per anum on his total pension entitlement. If however the public service pension reduction was confined to the 37.3% element of his pension funded by the NTMA, the reduction would be €4,405. Unsurprisingly, Mr. Farrell was aggrieved at this outcome believing it to be unfair, inequitable and potentially unconstitutional as amounting to a confiscation of his private property. He argued that he had privately paid for the major part of his pension at no cost to the Exchequer and the State, in applying the PSPR to the privately funded portion of his pension is actually making a profit at his expense, contrary to what he sees as the intention of the FEMPI Act.
6. Section 6 of that Act provides as follows:
2 "6. - Where the Minister [for Finance] is satisfied that exceptional circumstances exist (because of some particular aspect or condition relating to the public service pension or the public service pension scheme concerned, including the funding of that pension or scheme) in respect of a particular class or group of pensioners and those circumstances materially distinguish that class or group from other classes or groups of pensioners to which section 2 applies, then, the Minister, if he or she considers it to be just and equitable in all the circumstances to do so, may by direction-
(a) exempt that class or group from the operation of section 2, either entirely or to such extent as the Minister considers appropriate, or
(b) modify the operation of section 2 to reduce their public service pensions in such manner as the Minister thinks fit, having regard to the nature and degree of the financial burden that would otherwise be borne by that class or group, and this Act, and any regulations made under this Act, shall be read subject to any such direction."
7. It would appear that in early 2011, Mr. Farrell raised these issues with the NTMA, who in turn brought them to the attention of the Department of Finance in a letter of the 8 th February, 2011. It appears that in that letter, the NTMA on Mr. Farrell's behalf sought a determination from the Minister under s. 6 exempting the privately funded portion of Mr. Farrell's pension from the PSPR.
8. In a reply of the 7 th March, 2011 from the assistant secretary of the Department, it was stated that there was insufficient information in the NTMA correspondence to allow the Minister to make such determination and it would be usual for the individual concerned to make his own case to the Minister. The assistant secretary suggested that Mr. Farrell should resubmit the claim with any further information or argument he wished to raise.
9. Following the change of government, Mr. Farrell appears to have asked a friend of his, Mr. Kevin Norton, a chartered accountant, to correspond with the Minister for Justice, Equality and Law Reform, who appears to have been known to Mr. Norton, on the issue of Mr. Farrell's pension. In a letter of the 22 nd May, 2011, Mr. Norton said:
"Under recent legislation, Jim's pension from NTMA is being cut. He has no problem with this in relation to the pension arising from his service with NTMA. But he thinks - and I agree with him - that cutting the portion of his pension that he earned in his previous employment (and which cost the State nothing) amounts to confiscation of his assets. I suggest that this is probably unconstitutional, and is certainly unjust and inequitable."
The legislation provides that the Minister is entitled to exempt or modify the reduction to a class of people to whom the legislation applies if he considers it just and equitable. It may well be that Jim is the only person in a particular class, but that does not mean that it is not a class under the Act. Accordingly, he requests that the Minister for Finance to (sic) make such an exemption/modification."
10. Mr. Norton enclosed with the letter a memorandum prepared by Mr. Farrell setting out his case and requested the Minister for Justice to ask the new Minister for Finance to review the case and allow an exemption.
11. Mr. Norton's letter was duly passed to the Minister for Finance, who replied to it on the 28 th June, 2011. The Minister referred to the fact that his predecessor had received a claim under s. 6 of the FEMPI Act on Mr. Farrell's behalf which had not been decided and he proposed to treat Mr. Norton's letter as a reactivation of the same claim. He went on to say:
"While it is possible to make a case that Mr. Farrell's pension circumstances are materially different to other public service pensioners, because of the nature of the transfer value paid across, the fact remains that his pension is included within the scope of the [FEMPI] Act on the basis that he is the beneficiary of a public service pension scheme within the terms of the Act. It must be emphasised that all public service pensioners, as defined in the Act, are subject to the reduction."
The claim is essentially based on the fact that Mr. Farrell transferred cash into the NTMA scheme in 1996 in return for service. After careful consideration, this does not, in my view, materially distinguish Mr. Farrell's pension in that there are very many former public servants who have purchased service in a public service scheme either by instalment or with a lump sum.
The Act makes no distinction as to the nature of the service that produced the pension which is to be reduced by s. 2. Whether that pensionable service was produced by money transferred in from another pension scheme, purchased by the member or enhanced by added years awarded for ill-health reasons or for professional qualifications held by the member has no bearing on whether the reduction applies. I have carefully considered the application for exemption, but I do not find that it would be just and equitable in all the circumstances to exempt Mr. Farrell's public service pension from the reduction."
12. Mr. Farrell was naturally disappointed by this response and on the 29 th September, 2011, he contacted the Ombudsman's office first by telephone followed up by a letter in which he asked the Ombudsman to examine his case and let him have a preliminary view prior to contacting the Department of Finance. In follow up correspondence in December, 2011, Mr. Farrell advised the Ombudsman that he had ascertained that the PSPR deductions from his pension were not in fact retained in the NTMA fund but remitted direct to the Exchequer.
13. Following further contacts with Mr. Farrell, the Ombudsman wrote to the Department of Public Expenditure and Reform ("the Department") on the 16 th March, 2012 about Mr. Farrell's case, which the Ombudsman had previously discussed by telephone with an official in that department. It would appear that the functions of the Minister for Finance under the FEMPI Act were transferred to the...
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