A recent recommendation of an Adjudication Officer at the Workplace Relations Commission provides some insight for employers that have restructured their Defined Benefit ("DB") pension schemes, particularly those who have used incentives for members to transfer accrued DB entitlements to Defined Contribution (“DC”) arrangements.
The respondent employer company had operated a DB pension scheme of which the complainant was a member. The employer closed the DB scheme to future accrual in 2016. For future service, employees could join a new DC scheme. Members could maintain their accrued entitlements under the DB scheme but the employer gave no commitment to fund accrued liabilities of the DB scheme into the future. Members were given an alternative option of taking a transfer value to the new DC scheme with the addition of a “top up” to their transfer value as an incentive (an “Enhanced Transfer Value” (“ETV”)). The complainant chose this option. When carrying out the ETV exercise:
- The Employer had paid for the complainant to have independent financial advice;
- The complainant signed a Member Decision Form and Discharge Deed (waiving all his rights in relation to the DB Scheme and discharging the trustees and the employer from liabilities); and
- There had been a 10 day cooling off period.
The ETV was calculated on a sliding scale of percentages linked to a member's age. The complainant was aged 56 and claimed the calculation method amounted to age discrimination under Section 6(2) of the Employment Equality Acts 1998-2015. However the employer argued this sliding scale was designed as a counterbalance to account for the fact that the nearer a member is to retirement, the more generous the transfer value under the Pensions Act 1990. Therefore, the nearer the member to retirement, the less of an enhancement they should need. Ultimately, the complainant's claim failed as he did not made out a prima facie case showing that he was discriminated against on the age ground and no actuarial evidence was provided on his behalf.
The adjudication officer did not reference specific facts when giving reasons for her recommendation but simply commented that her decision had taken into account all the evidence and submissions. However, the fact the employer had paid for the member to obtain independent financial advice and ensured a Discharge Deed was completed would have weakened the complainant's case had they been able to make out a prima facie case of age discrimination.