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.

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 scheme since the company was solvent when it was wound up, and that the scheme 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 scheme remained heavily invested in equities throughout that time).  There was a shortfall in the pension fund which had grown to €2.7m by the time its winding up was confirmed in November 2008.  Parc had earlier offered an ex gratia contribution of €700,000 (which represented the entire deficit as at December 2007) and as a gesture of goodwill subsequently agreed with the scheme trustees to increase this to €1m as a one-off contribution, 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 scheme.  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 the part of the trustees or in relation to the investment decisions made by them, finding that they acted reasonably in all respects.  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 schemes.  The global financial turmoil of recent years has meant that a large number of pension schemes are now facing significant deficits.  With no immediate prospect of being able to fund these deficits, it is possible that more situations like Parc may end up before the Pensions Ombudsman or before the Courts.