The February 2014 edition of Pensions Pieces included an article on the case of ATP Pension Services A/S v Skatteministeriet in relation to which the Advocate General had delivered an opinion that defined contribution pension scheme may be capable of being a special investment fund and so VAT exempt. On 13 March 2014, the CJEU confirmed its decision in this case saying that a pension fund may constitute a 'special investment fund' if the scheme is funded by members, the funds are invested using a risk-spreading principle and the member bears the investment risk, as was established in this case. It also said that it is of little consequence that the employer also pays contributions and that there are different ways of paying out the funds invested.
At first sight, this decision suggests that UK occupational defined contribution pension schemes would be VAT exempt, but there are some notable differences between the Danish arrangements and UK pension schemes. We are awaiting HMRC's response (if any) to this decision, which is an unwelcome one for the UK Government which had argued against the exemption in the case. However, this may well herald great savings and claims for past overpayments by DC pension schemes.