The "Omega Pharma" Case Summary
The decision of the High Court in the Omega Pharma case must be considered by trustees and employers dealing with the wind-up of a defined benefit scheme. Click on the link below for a full summary of the case.
http://www.aonportal.ie/consulting/attachments/spotlight_issue53.pdf
The "Omega Pharma" case – upheld by Court of Appeal
The decision of the High Court in the Omega Pharma case was appealed by the company, and at the Court of Appeal hearing in November 2014, the appeal was dismissed. The written judgment which was issued on 10 February 2015 addresses the two grounds of appeal:
- The Scheme documentation should have been interpreted as requiring the Scheme to be wound-up at the start of the notice and hence the contribution demand was invalid: the Court of Appeal decided that the documents should be read as providing for the wind-up to take place at the end of the notice period (in any event the employer had given three months' notice in the letter of termination)
- The correct measure of any shortfall on wind-up was the statutory minimum funding standard (MFS), and as the Scheme satisfied this, no further contribution was required: the Court of Appeal rejected this view as the rules required that the Trustees should have sufficient funds to provide the benefits under the Scheme.
Hence the High Court decision that the employer was liable to pay the contribution demanded by the Trustees, even though the Scheme met the MFS, was upheld. Whilst this decision reflects the circumstances of this case, and the provisions of the Scheme rules, it reinforces the need for Trustees of a DB scheme which is being wound-up to consider what powers they have under the scheme documents to seek additional funding, and to take legal and actuarial advice.
