Defined benefit schemes in deficit - deadline for Section 49(3) & Section 50 applications.
Thursday 19 August 2010: As you are aware, following an extension by the Board, the deadlines for defined benefit schemes to file a funding proposal and/or a Section 50 application will start to expire from 30 November 2010 next. Therefore it is critical that scheme trustees, in conjunction with employers and advisers as appropriate, take steps to meet the minimum funding standard under the Pensions Act 1990 as amended (“the Act”), either by eliminating the deficit or by submitting the appropriate applications (e.g., a funding proposal under Section 49(3) and/or application for a direction to the trustees to reduce benefits under Section 50 of the Act) on or before the deadline for their scheme.
The Board expects to receive the applications by the due deadline and will consider these on the basis of the factors and criteria previously outlined by it in various communications, including the guidelines and FAQs published on our website at www.pensionsboard.ie .
Another point to highlight is that, in the event of schemes not submitting such applications by the deadline, the Board will be obliged to consider using its statutory powers to ensure that schemes comply with the requirements of the Act. These include the power under Section 50 to unilaterally direct the scheme trustees to reduce benefits and/or to prosecute trustees for failing to submit a funding proposal. While the precise course of action will be considered on a case-by-case basis, it is important to emphasise that schemes must take the necessary measures to address their deficits, failing which the Board will take such action as it deems appropriate.