Irish pensions legislation allows certain pension funds to be transferred to an overseas arrangement. A Revenue circular states that such transfers are only allowed if the transfer is for bona fide reasons and a declaration is made by the transferor to this effect.
Two important aspects of the legislation were recently considered by the High Court; firstly, whether or not a pension provider must verify the bona fides of a transfer and secondly, whether the transferor is required to have an employment connection with the transferee jurisdiction.
The High Court found that a pension provider is not required to investigate the validity of a declaration of bona fides by the transferor unless there is information available which suggests that the transfer is not for bona fides reasons. In this regard, each case must be looked at on its own particular facts.
Regarding the second point, the Court found that there is a distinction between occupational pension schemes and PRSAs on the basis that PRSAs are open to individuals who are not employed. Therefore, it cannot be a prerequisite for an overseas transfer of a PRSA that the transferor has an employment connection with the overseas jurisdiction.
The impact of this case is that it is likely to be more difficult for pension providers to prevent overseas pensions transfers in the absence of any facts which would give rise to a suspicion as to the bone fides of the transaction.