The Commercial Court recently held that the pension funds of two individuals are not amenable to attachment by way of appointment of a receiver. This judgment offers some clarity as to the extent to which pension fund assets may be attached by creditors after the confusion caused by the 2010 unreported decision which saw Kingspan director, Brendan Murtagh, lose his approved retirement fund (ARF) to judgment creditors.
In March 2012, EBS Building Society succeeded in appointing a receiver over the pension funds of two individuals who owed money to the Society. The two individuals were members of small self-administered trust-based occupational pension schemes and had not yet retired. The individuals appealed the appointment of the receiver over the pension funds.
The Court found that the individuals’ pension funds are not amenable to attachment by way of appointment of a receiver. The Court’s reasoning was principally based on the following conclusions:
- Under the terms of the pension deeds, neither of the individuals had legal or beneficial ownership of the assets held within the pension fund until retirement age and even on reaching retirement age, their right to receive a pension was still subject to the agreement of the trustees
- Both pension schemes were established for the sole purpose of providing retirement benefit
- Both pension schemes were established in accordance with the law and were shown, to the satisfaction of the Revenue, to have been established under irrevocable trust
- The pension deeds provided for a prohibition on the assignment of benefits from each of the pension funds
Consequently an order was made to discharge the appointment of the receiver over the pension funds.
Although the Court appears to have based its decision on the specific terms and characteristics of the schemes, their characteristics are common to most Revenue-approved occupational pension schemes in Ireland. Consequently, it would appear that most occupational pensions are outside the scope of creditors prior to retirement. It should be noted that this case can be distinguished from an earlier Commercial Court case in which a receiver was appointed over the Approved Retirement Fund (ARF) of Mr Murtagh. This was because an ARF is not an occupational pension scheme and an individual with an ARF may access the assets of the ARF prior to retirement.
Given that an individual’s pension is often one of their most valuable assets, this judgment will provide a degree of comfort to members of occupational pension schemes as well as providing clarity for the pensions industry.
It is understood this decision is being appealed to the Supreme Court.
Contributed by Lorna Osborne & Mary Greaney.