The Pensions Act 1990 has been amended to provide a new mechanism by which the trustees of an underfunded DB scheme can, as part of a scheme restructuring, apply to the Pensions Board to reduce higher pension benefits. Under the new provisions:
- pensions of between €12,000 and €60,000 can be reduced by up to 10% (provided that no pension can be reduced below €12,000);
- pensions of €60,000 or more can be reduced by up to 20% (provided that such pensions cannot be reduced below €54,000).
The new provisions give trustees another option to consider in the event of a scheme restructuring. However, as trustees have a duty to act in the best interests of all scheme members, they should take appropriate legal and actuarial advice before applying to the Pensions Board to reduce pensions in payment. It is expected that the Board will revise the relevant statutory guidance in light of this new option and that trustees will be required to comply with same before making such an application to the Board.