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We examine the scope of the Pensions (Amendment) (No. 2) Bill 2017 and look at the potential impact on defined benefit pension schemes in Ireland, if enacted.

The Pensions (Amendment) (No.2) Bill 2017 (the Bill) has passed the second stage of approval in the lower house of the Irish Government (“he Dáil) by 82 votes to 51. It will now be referred to the Select Committee on Social Protection. The Bill, if passed into law, will result in seismic changes for defined benefit pension schemes in Ireland. Amongst the measures included in the Bill is an appeal mechanism for members of a defined benefit scheme where the wind-up process has been initiated. The Bill also contains provisions that would enable the Irish Pensions Authority (the Authority) to veto any proposal by a solvent employer to wind-up a defined benefit scheme.

What is in the Bill?

Member Appeal Process

The Bill will allow the members of a defined benefit scheme to launch an appeal to the Authority against any decision made by the trustees to wind-up the scheme. The members must agree by majority decision to appeal the decision of the trustees on the basis that it may be inequitable to any category of its members. The provision, if enacted, will also cover any proposal by trustees to freeze future accrual of benefits in a scheme.

Enhanced Powers of the Pensions Authority

The Bill will also make it illegal for a solvent company to wind up a defined benefit pension scheme without the Authority’s consent in circumstances where the value of the scheme’s assets is less than its liabilities. In these instances, the Bill would treat the pension deficit as a debt owed by the company and the consent to wind-up the scheme would be withheld until the shortfall was paid to the trustees.

Notwithstanding those provisions, the Bill proposes that the Authority could consent to a scheme wind-up in circumstances where the payment of the shortfall would present a serious risk to the company’s solvency. In such a scenario, the Authority would have the power to require that the company pay at least 50% of the pension debt or pay off the debt over a maximum period of five years. During this period, consent to the wind-up of the scheme will not be provided. Any decision of the Authority to refuse to grant consent can be appealed to the High Court.

The Bill also requires the Authority to prepare a feasibility report on (i) changing the current statutory funding standard for defined benefit schemes, and (ii) establishing a pension protection scheme similar to the Pension Protection Fund in the UK.


The Bill was a private-members bill brought by Fianna Fáil’s Willie O’Dea and had cross-party support. It is still very much in its early stages and its provisions will need to be tightened as they are open to interpretation in their current form. For instance, confusion exists in relation to what would amount to “inequitable treatment” that would allow members to appeal a scheme wind-up and will this treatment be set out in legislation or left to the discretion of the Authority.

The Bill has to pass a further three stages before it can become an Act and it will be interesting to see what the final version will look like if it is enacted. What is clear is that employers and trustees should examine any defined benefit schemes that they may operate and analyse what effect the Bill might have for them.

For more information on the scope of the Bill and how it may affect employers and trustees, please contact Stephen Gillick or another member of our Pensions team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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