Friday, July 25 15:29:56
Significant changes to the landscape of defined benefit pensions in Ireland are now expected following the landmark ruling delivered today by Justice Moriarty in the High court.
The case is Holloway and Others v Damianus BV and Others, which has become known as the Omega Pharma case.
The case was brought by the trustees of the Omega Pharma Ireland Pension and Death Benefit Scheme against the principal employer of the scheme, Damianus BV, and participating employers Omega Teknika Ltd and Chefaro Ireland Ltd.
The trustees claimed for payment to the scheme of E2.23 million, representing what the trustees believed the companies owed to the scheme based on the provisions of the scheme's rules following Damianus BV's decision to give notice to the trustees that it was terminating contributions and triggering a wind up of the scheme.
Mr Justice Moriarty today ruled in favour of the trustees stating that the demand, which the trustees issued during the three month notice period, was valid based on their interpretation of the rules of the scheme.
The judge also ruled that the quantum of the demand, which was calculated using an alternative actuarial basis which exceeded the Minimum Funding Standard, was reasonable. It was also notable that the judge commented unfavourably on the lack of engagement and negotiation from the employer.
Aisling Kelly, Senior Consultant, Mercer said "The decision could have wide-reaching implications for sponsors of defined benefit schemes in Ireland”. Ms Kelly added "Effectively the ruling could prevent an employer from closing and winding up a scheme without ensuring that the scheme is fully funded, on a basis that may be in excess of the Minimum Funding Standard".
Full details have yet to be released in a published judgement; however, it is expected that the decision will be widely welcomed by trustees and members and may serve to slow the pace of closure of defined benefit schemes given the potential financial obligations with which employers may now be faced.
For more see: www.businessworld.ie