Pensions Update - Autumn 2013

Author:Arthur Cox's Pensions Practice
Profession:Arthur Cox
 
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Case Update

A recent case in the High Court, Willis & Ors v the Pensions Ombudsman and Emer Lawlor (Notice Party) shows the extent of the Financial Emergency Measures in the Public Interest (No.2) Act 2009 ("FEMPI"). On an appeal from the Pensions Ombudsman, the High Court uphold the Ombudsman's ruling that the plaintiffs - the Trustees of the Irish Blood Transfusion Service pension scheme - had not applied the provisions of FEMPI correctly.

Section 2 of FEMPI imposed salary cuts on public servants. Section 3 provided that the cuts should be disregarded for the purposes of calculating pension entitlements in the case of public servants who retired before 29 February 2012. The employers had reduced Dr Lawlor's salary in accordance with Section 2 of FEMPI although the applicability of the legislation was disputed. The Trustees argued that the pension scheme was not a 'public service pension scheme' within the meaning of FEMPI. Thus, they believed Section 3 of FEMPI could not apply to the employee. The Ombudsman found for the member on the basis that FEMPI could not be partially implemented. The Trustees appealed the decision. The High Court declined to overturn the Ombudsman's decision holding that a clear and serious legal error had not been demonstrated.

Comment

The High Court accepted the Pension Ombudsman's broad justice approach and declined to apply a technical approach to the detriment of the member. The Court indicated that the Trustees should have made further enquiries of the employer when presenting their case to the Ombudsman. This case highlights the importance in trustees and employers ensuring that full information is considered in making IDRP determinations and in responding to Pensions Ombudsman investigations.

Preparing for 2014

Changes to State Pension Age

With effect from 1 January 2014, the State Pension (Transition) will be abolished and the age from which a State (Contributory) Pension will first be paid will change from age 65 to age 66. From 1 January 2021, it will increase to age 67 and from 1 January 2028, it will increase to age 68.

Trustees and employers should review the terms of their pension schemes to see what effect these changes will have on their schemes. Where there are bridging pensions or integration / coordination with the State pension, amendments to the scheme documentation are likely to be required. The latest indications are that there may be draft legislation on this issue before the year end. If...

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