Ireland: Pensions Update, Winter 2016

Last Updated: 24 November 2016
Article by Philip Smith and Catherine Austin
Most Read Contributor in Ireland, October 2018

1. BUDGET 2017

Budget 2017 was announced on 11 October 2016 and the implementing Finance Bill was published on 18 October 2016. Together, they contained two pensions-related initiatives.

Benefits for Pensioners Increase

There will be a €5 per week increase in the State pension with effect from 1 March 2017. The timing of the increase will mean that schemes which operate State pension offsets based on the State pension amount in January of a given year will not see a change to the deduction until January 2018.

PRSA and Tax Planning

The Finance Bill proposes legislative amendments to provide that, where benefits are not taken by a Personal Retirement Savings Account ("PRSA") owner on or prior to his or her 75th birthday, they will be treated as being taken on that date and the PRSA will be treated as 'vesting' on that date. For individuals over the age of 75 with an unvested PRSA, the PRSA will be deemed to vest on the date of the passing of the Finance Bill 2016, though transitional arrangements will apply. This is a codification of the Revenue's view that PRSAs are deemed to vest at age 75.

The effect of this provision is that such PRSAs will now be subject to the imputed distribution regime that applies to vested PRSAs (i.e. a deemed distribution of taxable income will arise at a rate of 6% of the value of the PRSA on each 30 November annually where distributions are not in excess of this amount). Further, the 75th birthday of an individual will be treated as a benefit crystallisation event for the purposes of the Standard Fund Threshold ("SFT") regime.



On 12 October 2016, the Pensions Authority (the "Authority") published the fourth and final tranche of codes of governance (the "Codes") comprising two codes. The final Codes cover guidance relating to member communications and ensuring charges borne by members provide value for money ("VFM").

The Codes are statements intended to promote best practice by supplementing the Authority's Trustee Handbook. The Authority intends that compliance with the Codes shall be made mandatory and that they (or similar codes) shall also apply to defined benefit schemes.

Value for Money

The Code states that the Authority considers the assessment and delivery of VFM to be an important part of the responsibility of trustees to act in the interests of their members. VFM is considered by the Authority to be achieved where costs provide good value in relation to the benefits and services provided when compared to other available options. Larger well-funded schemes are likely to rely on bargaining strength to ensure VFM and will have the resources to maintain and survey this. Smaller schemes where the employer has selected the provider may not necessarily have alternative options, particularly where a 'bundled' solution is sourced from an insurance house/institution.

To ensure that members are provided with VFM, the Code suggests that trustees should consider the type of services provided to members, the costs of such services across a range of service providers and the performance of service providers in the context of the needs of the members. Trustees should be willing to challenge their service provider if they feel members are not receiving VFM. While this is a laudable aim, it is not necessarily within a trustees' sole power to make changes to the provider.

Member Communications

This Code supplements the existing obligations of trustees to disclose information pursuant to the Pensions Act 1990 (the "Pensions Act") and the Disclosure Regulations. The Authority stresses that the focus of trustees should be on the effectiveness of member communications rather than simply meeting their legal obligations under the Pensions Act and the Disclosure Regulations.

With this goal in mind, the Code directs Trustees to:

  • consider the most effective approach for communicating with members (based on the demographic of scheme members) and consider initiatives for the promotion of member engagement;
  • convey trustee communication objectives to scheme administrators and review draft communications; and
  • develop a communications programme which ensures that:

    • language used is clear, understandable and considers members' needs and financial literacy;
    • key information is highlighted and benefit options are presented simply and clearly;
    • members are regularly informed that their contribution levels can affect the overall size of their retirement fund, are encouraged to check whether they are on track to meet their retirement goals and are informed of the options available to increase their level of contributions; and
    • members can understand the investment options available and costs and charges incurred by members are clearly disclosed.

In practice, the action taken by trustees will depend on the profile of the scheme and the resources available to the trustees, having regard to the obligation of trustees to ensure that members receive value for money. Trustees should review the Code and consider how to align its aspirations with the relatively limited regulatory obligations. It is important that trustees take care not to stray into the area of giving advice. The trustees have no trust or statutory duty to give advice or to promote or encourage participation in a scheme. Having said that, the significant majority of the Code's suggestions can be accommodated within statutory disclosure requirements.


The Authority has issued revised statutory guidance (with an effective date of 1 January 2017) in relation to Section 34 of the Pensions Act. Section 34 relates to a member of a funded occupational pension scheme who is entitled to a preserved benefit and who will, in certain circumstances, be entitled to a transfer payment.

The assumptions used to calculate a minimum transfer value were previously updated in 2012. The impact of the new assumptions will depend on the member's age and gender and the benefits provided by the relevant scheme. As the minimum transfer values are also often used in calculating scheme liabilities for the statutory minimum funding standard (the "MFS"), the new guidance may have funding consequences for schemes seeking to meet the MFS.


Trustee in Bankruptcy may not access/ force access of uncrystallised funds

The UK Court of Appeal in the case of Horton v Henry has confirmed that a UK trustee in bankruptcy cannot access uncrystallised funds in a bankrupt's pension arrangements or force the bankrupt to crystallise the funds so that they become available for distribution.

Although the bankrupt member was eligible to elect to draw down a lump sum and other payments, the member had made no election and, at the date of the application, the pension was not in payment. The bankrupt member also indicated that he did not intend to make any such election in the foreseeable future.

The Court held that a prospective right to a future payment of income from a pension fund is not the same as an entitlement to that income and that a bankrupt cannot be forced to take steps to turn pension rights into income. The Court compared the situation to an attempt to force a bankrupt to work or request payment from a discretionary trust to enable payments to be distributed which acts are equally impermissible.

Irish legislation similarly provides that mere interests in or entitlements under relevant pension arrangements shall generally not be treated as assets of the debtor (with certain prescribed exceptions). The decision in Horton v Henry may therefore provide valuable guidance to trustees where a member whose benefits have not yet commenced is declared bankrupt.

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 Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions