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The Pensions Authority Guidance Note (Guidance) on the European Union (Supplementary Pension Rights) Regulations 2019 begins with a summary which states that the effect of the Regulations is to incorporate into Irish law the concept of the “outgoing worker”. The term “outgoing worker” was initially defined in Directive 2014/50/EU (the Portability Directive), which aims to further facilitate the freedom of movement of workers between EU member states.

The summary goes on to list the rights and protections to be afforded to outgoing workers. These include the right to a refund of pension contributions where service in relevant employment terminates without a preserved benefit entitlement; and the outgoing worker’s right to join a scheme that is associated with their employment within a period of no more than 12 months after joining employment. All well and good it seems.

The outgoing worker

The Guidance explores the decision needed to determine that a member is an outgoing worker and confirms that it will need to be made by the employer and trustees. It suggests that a process be put in place when a new employee enters service and when an active member leaves service. While the recommended process for employees commencing service will certainly add to the administrative and record-keeping burden, it does not raise any specific concerns.

However, the recommended steps for when an active member leaves service will be difficult to adhere to. It is recommended that the trustees, at the point that the active member leaves service, make “appropriate enquiries” of the member to see if they can be categorised as an outgoing worker. If the member answers "yes" it suggests that evidence be sought, by way of a letter from the new employer, confirming the new employment. This will almost certainly cause difficulties in the majority of instances. An active member leaving employment may be considering any number of possibilities and may have no idea, at the point of leaving service, as to where their next employment is likely to be. Does this mean that trustees will need to continue efforts at contacting departed members long after they have left the relevant employment until they choose a new location to work in?

The exclusion of closed schemes?

The Guidance confirms that the Regulations will not apply to schemes that have not accepted new members since 20 May 2014. There may be circumstances arising where smaller employers are informed by advisors that the Regulations do not apply to their scheme as they have not accepted new members in the intervening period, only to trigger the applicability of the Regulations when new members are accepted. This might occur without the employer ever becoming aware of potential entitlements or the concept of the outgoing worker.

Equal treatment?

Later in the text, the Guidance highlights a significant issue that has troubled many industry stakeholders since the introduction of the Regulations. This deals with the apparent regulatory tension between section 70 of the Pensions Act and the Regulations themselves. Section 70 requires equality of pension treatment. However, the Regulations permit only those that can be categorised as outgoing workers to take a full refund of benefits. This means that those other members that choose further employment in Ireland or a non-EU country after leaving service will not have a similar entitlement. The Guidance provides no solution to this potential scenario and closes the equal treatment discussion by stating that this potential discrimination issue is a matter for employers, the scheme trustees and their legal advisors.


The Guidance also contains a paragraph entitled “the tax treatment of refunds of employer contributions”, but it does not give any detail on what the tax treatment is likely to be. It simply states that refunds payable to members affected by the Regulations are a Revenue matter. One wonders why this paragraph was included at all as there is no exploration of the possible tax treatment and the industry continues to await an update from Revenue on this point.

Conclusion and actions

It is very clear that the Guidance from the Pension Authority falls short in many respects and the more prominent concerns held by industry stakeholders have not been addressed.

Trustees and employers will need to put the necessary administrative procedures in place to facilitate the recommendations made by the Authority on new employees commencing service and active members leaving service. A questionnaire to allow for outgoing workers to be identified will need included in procedures for all new members.

It may also be necessary to initiate a review of the scheme’s trust deed and rules to deal with, as far as possible, the equal treatment concern and the refund of benefits to those members that have been classified as outgoing workers.

For expert advice on your organisation’s pensions queries, please contact a 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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