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We have previously commented on legislation introduced as part of the process to amalgamate the offices of the Financial Services Ombudsman and the Pensions Ombudsman (see post of 27 May 2016 below). The decision to amalgamate the offices was made by the Government in 2013 following a recommendation from the OECD. Two draft bills (The Financial Services and Pensions Ombudsman Bill and a Private Members Bill) providing for the formal amalgamation of the offices were subject to pre-legislative scrutiny by the Joint Committee on Finance, Public Expenditure and Reform and Taoiseach late last year. Pre-legislative scrutiny is a relatively new aspect of the Irish legislative process where draft legislation is reviewed and scrutinised by parliament (normally through committees) before a final version is drafted.

While the legislation is yet to be finalised and the offices are yet to be formally amalgamated, the position of Financial Services Ombudsman  (FSO) and that of Pensions Ombudsman is currently held by one individual, Mr Ger Deering.  At a recent presentation given by Mr Deering to members of the Association of Pension Lawyers in Ireland, Mr Deering indicated that he did not expect significant changes to the manner in which  complaints to the Pensions Ombudsman are dealt with on foot of the new legislation. Rather, steps have been taken to bring the FSO’s office and practices more in line with those of the Pensions Ombudsman. In particular, a new Dispute Resolution Service was introduced for FSO complaints which it is hoped will be more flexible, informal and allow for earlier resolution of disputes. In addition, it is intended that this new process will result in informal methods of dispute resolution (including mediation and conciliation) becoming the first and preferred options for resolving complaints with investigations and formal adjudications being seen as a last resort.

Parties to Pensions Ombudsman complaints should be aware of this increased focus on informal resolution of complaints. It is also worth noting that there is provision within the draft Bill to allow for the publication of Pensions Ombudsman decisions in anonymized form (to date, only summaries of selected cases have been published by the Pensions Ombudsman’s office). If this provision is included in the final Bill, it will provide useful guidance to complainants and respondents on how the Pensions Ombudsman might adjudicate in any given case and could lead to more cases being dealt with by mediation instead of formal adjudication.

 

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Statutory Instrument No.229 of 2016, signed by the Minister for Social Protection on 5 May, represents another step towards the amalgamation of the offices of the Financial Services Ombudsman and the Pensions Ombudsman. The Government made the decision to merge the two agencies in May 2013, after a recommendation from the OECD.
Continue Reading Pensions Act amended to allow Financial Services Ombudsman to hold the office of Pensions Ombudsman

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At the Irish Association of Pension Funds Annual Investment Conference held last week, Brendan Kennedy, the Pensions Regulator, reiterated the Pensions Authority’s continued focus on good governance and its plans for ramping up the Authority’s programme of engagement with trustees of defined benefit schemes. This engagement includes continuing to invite such trustees to meet with the Authority for detailed discussions on how the trustees undertake the management of their scheme and their governance responsibilities.

The Pensions Regulator has confirmed that the objective of these meetings is to find out what trustees know and understand. While the Authority recognises that trustees are faced with difficult responsibilities and must take advice in relation to matters in respect of which they have no or limited expertise (for example actuarial, legal and investment matters), as the responsibility for the scheme rests with the trustees, the Authority expects them to understand the advice they receive and the decisions they are required to take. It is for this reason that the Authority insists that the meeting with the trustees be without their financial or legal advisers.

The Authority has indicated that the financial management guidelines for defined benefit schemes (issued in May 2015) will be used as the basis for these discussions. These guidelines outline what the Pensions Authority views as good practice for trustees of defined benefit schemes in relation to their understanding and management of the funding and investment of their defined benefit scheme. While not legally binding, it is expected that the trustees (at a minimum) will have the information and understanding set out in these guidelines. The guidelines cover the scheme data the trustees should have, governance practices relevant to financial management, reviews/processes the trustees should undertake and the analysis the trustees should carry out to arrive at decisions.

Clearly, for defined benefit schemes, the focus is on financial matters and the Authority expects trustees to understand the strategies and plans being pursued by the scheme and be able to explain these and how they were arrived at. According to the Pensions Authority, trustees should know more than their members, have enough time and commitment to carry out the role as trustee properly and be able to ask the right questions (in particular, of their advisers). These meetings are seen as a permanent part of the Pensions Authority’s supervision of defined benefit schemes and perhaps, in the future, will be extended to large defined contribution schemes. It can be expected that the Authority will take a more robust regulatory approach to schemes where they have concerns about trustee ability following such meetings.

The Regulator also announced at the conference that the Pensions Authority was developing pension reform proposals for 2017 and a public consultation process for later this year.

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What is the Omega Pharma case?

The Omega Pharma case has confirmed that the scheme’s governing documentation and not the Pensions Act minimum funding standard determine the employer’s liability to contribute to defined benefit schemes on wind-up.

On 25 July 2014, Mr Justice Moriarty in the Commercial Court handed down judgment in the case of Holloway & Ors v Damianus BV & Ors [2014] IEHC 383 and found in favour of the trustees of the Omega Pharma defined benefit scheme in their claim for deficit contributions against the scheme’s employers. The trustees succeeded in obtaining judgment in the amount of €2,439,193.56 (inclusive of interest) against the employers. On appeal, the newly established Court of Appeal affirmed the judgment in favour of the trustees (Holloway & ors -v- Damianus BV & ors [2015] IECA 19).

If the Element Six case (Greene & Ors v Coady & Ors [2014] IEHC 38) was the most important pensions law case for trustees in the recent past, the Omega Pharma case was not far behind. The Omega Pharma case is also particularly relevant to employers who operate or participate in defined benefit schemes. However, a number of key issues remain unanswered.
Continue Reading The Omega Pharma case – Trustee and Employer Guidance

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On Friday last, Justice Moriarty delivered his judgment in the case of Holloway & Ors v Damianus BV & Ors (Record No. 2013/6239P).

This case arose out of a contribution demand issued by the trustees of a defined benefit pension scheme in 2012. The demand was issued following the service by the principal employer of three months’ notice terminating its liability to contribute as provided for under the rules of the scheme. When the principal and associated employers failed to pay the amount due on foot of the contribution demand (€2.23 million), the trustees issued proceedings seeking to enforce payment in the High Court.

In considering whether or not the trustees could, or indeed should, have made the contribution demand, Justice Moriarty noted the previous comments of Justice Charleton in Green and Ors v Coady and Ors and, in particular, his comment that:-

“once trustees had acted honestly and in good faith, taking into account all relevant considerations and excluding irrelevant ones, the appropriate standard for review of their decisions is whether no reasonable body of trustees could have come to the same decision”.

Based on this standard of review, Justice Moriarty held that the decision of the trustees to issue a contribution demand did not appear to be one which no reasonable body of trustees would have made. Justice Moriarty also noted that the trustees, in conjunction with the scheme’s actuary, had sought to identify a reasonable basis of valuation with a view to providing the benefits under the scheme and that the trustees appeared to have been acting in good faith and in the best interests of members in accordance with their fiduciary responsibilities.

In those circumstances, the Court held that the trustees were entitled to succeed in their claim. A copy of this judgement will be available in the coming days on the High Court’s website – www.courts.ie.