The Pensions Ombudsman, Paul Kenny, has delivered his response to a number of complaints lodged by the members of the Parc Aviation pension scheme.  The members were unsuccessful in their bid to have the Ombudsman compel their former employer to use some of the profit from the sale of the company in 2008 to fund the pension scheme’s deficit of €1.7m.

The former Parc workers raised a number of arguments with the Ombudsman, including that Parc had a moral obligation to bridge the shortfall in the pension fund since the company was solvent when it was wound up, and that the fund should have been wound up as soon as the sale was agreed thereby avoiding the consequences of the falling equities markets (the sale of Parc Aviation took several months to complete and the pension fund remained heavily invested in equities throughout that time).  There was a shortfall of €2.7m when the pension fund was finally wound up in November 2008.  Following negotiations with the scheme trustees, Parc agreed to make a one-off contribution of €1m as a goodwill gesture, leaving the scheme with a closing deficit of €1.7m.

In his response, the Ombudsman rejected the claims made by the members. He stated that he did not believe the company had failed in its moral duty towards the pension fund.  He noted that under UK legislation the company would have been required to fund the deficit but pointed out that such action was not required under Irish law.  

Mr Kenny also found that there was no fault on behalf of the trustees or in relation to the investment decisions made by them, finding that they acted reasonably in all aspects of the case.  He noted that the case highlighted the difficulties trustees face against the current backdrop of volatile markets and increased corporate restructuring.  

The circumstances of the Parc case highlight the increasingly serious problems faced by Irish pension funds. The global financial turmoil of recent years has meant a large number of pension schemes are now facing significant deficits. With no immediate prospect of being able to fund these deficits it seems likely that it is only a matter of time before more situations like Parc end up before the Pensions’ Ombudsman or before the courts.