Two government departments were not entitled, after the State took over Trinity College’s pension scheme in 2009, to reduce by some €20,000 annually the €92,153 annual pension of a former secretary to the college, the High Court has ruled.
After the college’s pension scheme reached a “critical state” in 2008, the €279 million in assets and €595 million in liabilities of the scheme were transferred to the National Pensions Reserve Fund in 2009, Ms Justice Marie Baker noted.
The judge rejected the challenge by the Departments of Education, Public Expenditure and Reform, and the Higher Education Authority, aimed at quashing the Pensions Ombudsman’s finding that Michael Gleeson, who retired aged 60 in 2011, should be paid the same pension entitlements as if he retired at age 65.
There was ample evidence before the Ombudsman to find Mr Gleeson did not retire “early”, as the Ministers argued, and rather an administrative decision was lawfully taken by the college in 2005 to allow him retire in 2011 aged 60, she said.
The Ombudsman also decided, in accordance with a contractual agreement between the college and Mr Gleeson in 2005, Mr Gleeson’s full pension benefit should be restored. The issue was not of early retirement but rather a change in Mr Gleeson’s normal pension age, he found.
The Ombudsman was entitled to find the attempt by the Ministers to retrospectively refuse augmentation of Mr Gleeson’s benefit was “impermissible and oppressive”, the judge said.
While critical of a lack of good corporate governance in the college, the Ombudsman found it could not be said relevant college management had not made the relevant decision, she noted. The Ombudsman was entitled to find the college’s failure to apply the correct rule of the pension scheme was not such as to vitiate the 2005 arrangement with Mr Gleeson, she ruled.
Cost neutral
She was giving her judgment arising from a situation where Mr Gleeson reached an agreement with the college in 2005 he could retire at age 60. Some €544,000, the sum required to effect a cost neutral augmentation of his pension entitlements, was transferred to the pension scheme and he retired in July 2011 at an annual pension of €92,153.
Before his retirement, the ministers argued the college could not pay him what they described as the “augmented” pension. The college said, because it had decided to augment his pension in 2005 before the scheme assets were transferred, the Ministers were not entitled to decide his amount of benefits.
In November 2011, the ministers directed the college to adjust his pension to reflect what they regarded as an “early retirement”, with the effect he was to be paid €71,674 annually.
When the HEA rejected Mr Gleeson’s appeal against the Ministers’ decision, he successfully appealed to the Pensions Ombudsman. The Ministers and HEA then appealed the Ombudsman’s decision to the High Court.
In her judgment, Ms Justice Baker said the Ombudsman was entitled to conclude revised terms of employment were agreed with Mr Gleeson in 2005 entitling him to retire at age 60 with full pension benefits.
Earlier, she noted the normal retirement age for a member of the college’s superannuation scheme is 65 but special rules permitted the employer to decide, on consent of the employee, the normal pension date shall be 60. Other rules provided the trustees of the scheme may augment pension benefits of a member with consent of the “principal employer”.
The trustees learned in 2002 the scheme was underfunded and decided it would not be augmented unless the increased benefits would be cost neutral to the scheme. Under a 2008 agreement, the State later took over the college’s pension fund and the two ministers got powers, under the Financial Measures (Miscellaneous Provisions) Act 2009, to exercise the discretion previously exercised by the trustees.
