Can a pensioner who has retired from employment and has been in receipt of a pension from the date of his retirement waive his right to this pension entitlement? Given that the majority of trustees will never receive such a request, it is not surprising that the answer to the question cannot be found in the Pensions Act or in the documentation of most pension schemes. We must therefore look to basic trust principles to determine if it is possible to disclaim/waive a right to a pension entitlement which has vested in a member for life under a pension trust.
Under trust law, a person cannot be required to accept an interest under a trust unwillingly. Therefore unless and until the person has assented to receipt of the benefit, it may be rejected. The rejection of a proffered distribution by a beneficiary is called a disclaimer. However any act of disclaimer must occur before any act constituting assent to the distribution. Consequently the right to disclaim will be lost if a beneficiary has consented to the receipt of the benefit or has otherwise demonstrated acceptance of the trust interest.
It has been held by the English courts that the general test for whether a beneficiary is entitled to disclaim a benefit from a trust is whether in the circumstances he has accepted the interest by words or conduct or has remained silent for so long that the proper inference is that he has determined to accept the interest. There does not appear to be any case law in Ireland in relation to the issue of disclaimers of trust interests. Should the issue arise in this jurisdiction, it is likely that the test set down by the English courts would be of persuasive authority.
In respect of pension trusts, a pension entitlement vests in a member for life under the pension trust upon the retirement of the member. A pension then becomes payable to the member at the date of his retirement. Having regard to the foregoing, it would appear that receipt of pension payments demonstrates acceptance of the member’s interest under a pension trust and therefore the right to disclaim this interest would most likely be deemed by the Courts to have been lost once the member accepted payment of the pension.
Under a non-pension trust arrangement a beneficiary who did not disclaim a benefit from a trust would be entitled to assign his interest for value. However the Revenue Commissioner’s requirements in respect of pension trusts prohibit any assignment, in whole or in part, of a pension. Therefore it is also not open to a member to assign any of his interest in his pension.
Although this is not the type of query that will arise every day, trustees should note that it is not legally possible for a beneficiary of a pension trust to voluntarily disclaim/waive further payment of his pension entitlement under the scheme once the beneficiary has previously accepted payment of the pension. The only option available to the scheme trustees in such a scenario would be to continue paying the pensioner’s benefits into his bank account. If payment is no longer accepted, then the trustees would have no option but to accrue the pension for the benefit of the pensioner.
Contributed by Lorna Osborne, Mary Greaney and Michael Wolfe