1. POLICY UPDATE
1.1 Access to ARF option for holders of Buy-Out Bonds originating in DB Schemes
A change to the Revenue Commissioner's administrative procedures, effective from 22 June 2016, means that former defined benefit scheme members whose benefits were transferred to a buy-out bond may now access an Approved Retirement Fund ("ARF") rather than being restricted to the purchase of an annuity.
The Court of Appeal has ordered a reference to the Court of Justice of the European Union (ECJ) in Grenville Holden Hampshire v the Board of the Pension Protection Fund which involves a pension scheme member, whose early retirement pension was reduced by two-thirds on the scheme's entry to the PPF, arguing that the statutory cap on compensation payable by the PPF does not give full effect to Article 8 of the EU Insolvency Directive.
Earlier this year it was announced that the UK’s Financial Assistance Scheme (“FAS”) would close to applications from 1 September 2016.
This does not affect pension plans that are currently progressing through the notification and qualification process or pension plans that have already qualified for assistance. However, any qualifying pension plans that have not yet started the process need to move quickly as they now have less than a month to make a notification to the FAS.
Summary
Pension scheme trustees will generally be concerned to try to ensure that the “safety net” provided by the Pension Protection Fund (PPF) remains potentially available for their scheme.
The regulatory amendments drawn up by the Secretary of State for Work and Pensions following the outcome in Trustees of Olympic Airlines SA Pension &Life Assurance Scheme v Olympic Airlines SA have been drafted narrowly and may end up protecting no one other than the beneficiaries of the Olympic Airlines pension scheme.
The issue
The EU Court of Justice has held that the Irish State is obliged to protect the pension benefits of former employees of Waterford Crystal who were left with only 18-28% of their pension benefits when the company became insolvent.
The “Waterford Crystal” Judgment
Introduction
The Court of Justice of the European Union (“CJEU”) delivered its judgment in Hogan & Others v. Minister for Social and Family Affairs, Ireland, Attorney General [2013] CJEU Case C-398-11 on 25 April 2013.
In a long awaited landmark judgment, The European Court of Justice has today found in favour of ten former Waterford Crystal workers who alleged the Irish State had failed in their obligations to correctly implement European Directive 2008/94EC ('The Directive’) on the protection of employees in the event of the insolvency of their employer.
The EU Court of Justice held that Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 (“Directive 2008/94”) applies to pension benefits under a supplementary pension scheme, regardless of the cause of the employer’s insolvency, and without taking into account state pension benefits. Directive 2008/94 provides that member states must protect the pension interests of retirees when an employer becomes insolvent.