# €30k shortfall in pension fund.Company wont honour it.



## Bonnielass (5 Jun 2010)

My Dads been working in a well known organisation for the last 32 years (hes 55 now). For at least half of it hes been in managerial positions.

Im not sure what the term is but he was the person in charge of monitoring the pension fund for some of the employees. Anyway throughout the years as one by one various people retired and various companies have taken over the "business", hes now the last one in this particular pension fund. Apparently there is a €30k shortfall in the fund, meaning my Dads pension is short €30k. 

This new company are refusing to honour what all of the other companies prior to them have done i.e maintained the integrity of the pension fund.

On top of this, the company are looking for redundancies so to say hes worried is putting it mildly. Im sorry if this is a bit long winded and my terminology isnt great but this is how he told it to me. Basically, are the company bound to honour a pension fund that has been in place loooong before they ever took over or is my Dad unfortunately going to lose the €30k that its owed?

Hes gone to a solicitor (useless and not returning calls) so hes also looking for recommendations of a good barrister that specialises in Labour Law if anyone can help there.


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## Brendan Burgess (5 Jun 2010)

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## Shirazman (6 Jun 2010)

Sounds to me as though he should contact the Pensions Ombudsman for starters, don't let him spend any more of his hard-earned money on a  solicitor until he has talked to these guys:-   [broken link removed]


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## Bonnielass (6 Jun 2010)

Thanks for that Shirazman. Ive written them an email outlining the situation and told my Dad to make an appt with them.Very helpful cheers.


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## LDFerguson (8 Jun 2010)

Is your Dad's pension a Defined Benefit scheme (i.e. he was promised a fraction of his salary for every year he worked) or a Defined Contribution scheme (Company and Employee invested a certain amount each pay period, with no guarantee of what the pension would be at retirement)?


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## Bonnielass (8 Jun 2010)

LDFerguson said:


> Is your Dad's pension a Defined Benefit scheme (i.e. he was promised a fraction of his salary for every year he worked) or a Defined Contribution scheme (Company and Employee invested a certain amount each pay period, with no guarantee of what the pension would be at retirement)?


Its a Defined Benefit Scheme. All other companies prior to this new company taking over have honoured this. This new company wont and hes at a loss at what to do. There have been no new employment contracts signed or anything in writing to alter what has previously stood for the last  32 years. He has no clue of his legal standing and is being fobbed off from "seniors" in the company only verbally saying they dont have to honour anything that has gone before them. All verbal, nothing in writing.

I contacted the Pension Ombudsman but they have yet to get back to me.


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## truthseeker (8 Jun 2010)

Bonnielass said:


> Im not sure what the term is but he was the person in charge of monitoring the pension fund for some of the employees. Anyway throughout the years as one by one various people retired and various companies have taken over the "business", hes now the last one in this particular pension fund. Apparently there is a €30k shortfall in the fund, meaning my Dads pension is short €30k.


 
Was he a trustee and if not who was, who was in charge of investing the fund, and why was the fund allowed to fall into a 30K shortfall before any of this came to light? He may be the last person left who has not yet drawn down his pension, but are there any current pensioners - because these will also be affected if the scheme is in such a bad way, and he may do better gathering them together to speak to the pension ombudsman.


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## Bonnielass (8 Jun 2010)

truthseeker said:


> Was he a trustee


He was the trustee for the duration of his employment there. 



> why was the fund allowed to fall into a 30K shortfall before any of this came to light?.


Presumably he didnt think itd be an issue seeing as all other companies prior to this upheld the conditions of the pension fund. Hes the last one left.


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## boaber (9 Jun 2010)

This document from The Pensions Board has a section on Mergers & Acquisitions, which you may find informative

[broken link removed]


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## Bonnielass (9 Jun 2010)

Thanks everyone for your replies. The Pensions Board were incredibly helpful today (thanks Maura in there). We finally got the answer we were looking for and unfortunately it looks like my Dad wont get the €30k hes entitled to.

Apparently a new company has no legal obligation to uphold any agreement previously upheld by former companies with regards to pensions.My Dads gutted but at least he got the answer he was looking for.All that hard work since he was 23 years of age and he gets a kick in the teeth right at the end.Im so sad for him,but is a warning to me to keep an eye on my own pension for the future.


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## JoeRoberts (12 Jun 2010)

30k is not a big deficit in a pension fund. 
It sounds to me like a ploy to pressure him into taking a redundancy or something like that. Has he fallen out of favour ?
Have they indicated that they want to close the scheme ?

Note that a 30k deficit at age 65 would reduce the annual pension by approx 1300 per annum. What was his expected pension ?

You also need to know what the 30k deficit actually means ? There are many ways to look at pension figures. It could be the deficit based on the legal minimum funding standard (ie if the scheme closed today) or the deficit based on the fund continuing. If it is the value based on the legal minimum funding standard then that is a worse case than if it is based on a continuance basis. Pensions vaulations are complicated and not exact.

Are the fund valuations based on the last actuarial valuation and if so what date was that at ? Have they been updated since? 

For starters, I would request a copy of the following
1) Last 3 annual reports of the scheme
2) Last 2 actuarial valuation reports. (These issue every 3.5 yrs)
3) Trust Deed and any amendments to it
4) Employee handbook.
5) Last pension statement.

 Write to the Trustees for the above if you have problems getting them. 

The report will show what the member profile of the scheme is and whether existing pensioners are being paid out of the fund or whether annuities have already been purchased for them. Although he may be the last employee there may be deferred pensioners - ie people who have left the company but have not started to receive their pension yet. If there are, then these are classed the same as your father and will also have a reduced pension.

I would also request a meeting with the Trustees and Pension consultants to discuss the figures. What you have at the momment is heresay from management who have some agenda. Trustees are obliged to properly communicate to members. They are there to protect your father's interests, even though they may well be members of management. 

A regular solicitor would be of no use in this case. You would need a solicitor who specialies in pension law. Expensive, but may be worth a consultation when you have all the documents and facts gathered. They may well negotiate an enhanced pension for him that would cover their costs.

There is no obligation on a company to keep a scheme open. But the Labour Court may well intervene is this type of case where the final employee is the only one who loses out. Where defined benefit pension schemes have been closed, the Labour Court usually insists on a good quality defined contribution scheme as a replacement. Employer contributions of > 10% in this case would not be unusual. I think this is the way for him to go. I would not give up on it yet. A bit of pressure from your side may well yield something

You don't need a solicitor for the labour court service. 

However you have to balance what impact following this up will have on his employment prospects in the company. But if they really wanted him to stay they would not have raised the pension issue. 

Feel free to PM me


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