Ireland: Funding At MFS Level May Not Satisfy Employer’s Liability To Contribute To DB Scheme

Last Updated: 19 December 2014
Article by Philip Smith, Keith Smith, Orla M. Clayton and Orla Ormsby

A recent decision of the High Court, which has been affirmed by the Court of Appeal, in favour of the trustees of a defined benefit pension scheme is likely to be the catalyst for significant change to the manner in which defined benefit pension schemes are viewed and treated in Ireland.

The decision was given in Holloway & Ors v Damianus BV & Ors. Arthur Cox represented the trustees (the "Trustees") in the case.


In October 2012, the employers of the Omega Pharma Ireland Pension and Death Benefit Scheme (the "Employers"), having announced a number of redundancies, gave the Trustees of the Scheme three months' notice of their intention to discontinue contributions to the Scheme as required under its rules. The Scheme was solvent under the statutory Minimum Funding Standard ("MFS").

Following this announcement, the Trustees obtained legal and actuarial advice as regards the level of contribution required from the Employers to provide the members with the benefits to which they are entitled under the Scheme. They then consulted the Employers with regard to the making of a contribution to the Scheme in accordance with its rules.

As the Employers failed to respond to the Trustees' correspondence and their efforts to engage, the Trustees served a contribution demand on 7 December 2012. When the Employers failed to pay the contribution demand, the Trustees issued High Court proceedings against them.


There were two key issues in the case. The first related to when the Employers' contribution liability terminated. The High Court found that, as there was a three month notice period during which the Trustees could make a final contribution demand, they were entitled to make the contribution demand when they did so on 7 December 2012.

The second issue was whether the Trustees were entitled to make a contribution demand in excess of the MFS in circumstances where the Scheme was solvent on the statutory MFS basis. The Trustees had determined, having regard to professional advice, that funding at the MFS level was insufficient "to provide the benefits under the Scheme", but that funding on an annuity buyout basis alone would be 'excessive'. The Scheme actuary recommended a funding combination of annuity buyout (actuarially adjusted) and MFS. This was the basis for the amount of the contribution demand served on the Employers on 7 December 2012.

The Employers argued that there was no justification for the contribution demand given that the Scheme was solvent on the MFS basis and that the Employers' obligations had therefore been satisfied.

This argument was rejected by the High Court which concluded that the Trustees had come to a reasonable decision as to the amount of the contribution demand in the absence of any engagement by the Employers. The Court was satisfied that the contribution demand was not one which no reasonable body of trustees would have made and it was critical of the lack of engagement on the part of the Employers. The Court found in favour of the Trustees, directing the Employers to pay the amount of the contribution demand plus interest and costs to the Trustees on behalf of the Scheme.


The Employers appealed the High Court judgment to the newly established Court of Appeal. On 20 November 2014, the three judge Court unanimously dismissed the appeal, and affirmed the decision of the High Court. A written judgment will be delivered in due course.


The decision is a positive one for trustees of pension schemes as it reaffirms the position that a decision to overturn a determination of trustees, acting with the benefit of professional advice, will not be taken lightly. It also provides clarity as regards the following:-

  • contribution demands issued during notice periods are likely to be upheld where they are made in a manner consistent with the provisions of the trust deed and scheme rules;
  • the MFS is a minimum contribution obligation only; it does not replace or supersede any greater obligations arising under the provisions of the trust deed or from actuarial advice provided in accordance with professional actuarial guidance; and
  • employers who ignore a requirement in scheme rules to carry out a consultation with trustees run the risk of being unable to raise arguments at a later stage in the event that the trustees take reasonable decisions in the meantime.

The judgment and, in particular, the finding that funding to the MFS level may not fully satisfy an employer's liability to contribute to a pension scheme, is likely to prompt both trustees and employers to re-examine the funding of, and level of benefits provided by, defined benefit pensions schemes.

Such re-examination is particularly likely to take place in the context of any contemplated closure or winding-up of defined benefit pension schemes. We will issue a further update on publication of the Court of Appeal's reasoned judgment.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.