The Pensions Board has announced revised deadlines for defined benefit schemes to submit funding proposals and/or Section 50 applications for approval by the Board. This extension, which expires from 30 November 2010, allows schemes to take into account the Occupational Pension Schemes (Preservation of Benefits) (Amendment) Regulations 2010. These regulations permit schemes to increase the pension scheme’s normal retirement age under Section 50 of the Pensions Act with immediate and retroactive effect.
It is critical that scheme trustees take the necessary steps to meet the minimum funding standard provided under the Pensions Act before the deadline relevant to their scheme.
The Pensions Board have stated that trustees who fail to submit a funding proposal under Section 49(3) (with or without a Section 50 application) by the revised deadline may be liable to prosecution and that the Board may use their power under Section 50 to unilaterally direct the scheme trustees to reduce benefits.
Persons found guilty of an offence under the Pensions Act are normally liable:
- on summary conviction to a fine not exceeding €5,000 or to imprisonment for a term not exceeding one year, or to both; or
- on conviction on indictment to a fine not exceeding €25,000 or to imprisonment for a term not exceeding two years, or to both.
The preparation of a funding proposal, whether or not it involves the making of an application under Section 50 of the Act, can be a complex and time consuming process. In addition, as a Section 50 application involves a reduction in benefits for members of the scheme, the Pensions Board insists on strict criteria being met before they consent to such an application. It is therefore of vital importance that schemes allow themselves plenty of time to finalise their funding proposals and complete any Section 50 applications in advance of the impending revised deadlines.
