ICSA Ireland

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Social Welfare and Pensions Act 2013 – section 59H

28 October 2020

The Act deals with some anomalies arising in private pension schemes caused by the increase in the State pension age from age 65 (currently) to age 66 (from 1 January 2014), age 67 (from 1 January 2021) and age 68 (from 1 January 2028). Section 18 of the Act inserts a new section 59H in the Pensions Act 1990 (as amended), which provides that:

  • it shall be permissible to reduce the bridging pension of a member who reaches age 65 on or after 1 January 2014 as if the State pension (contributory) was payable to that person from age 65; and
  • where the trustees of a scheme are required to pay an integrated pension calculated by reference to the State pension (contributory) payable from the age of 65, notwithstanding anything in the rules of the scheme, they have a discretion to amend the scheme to ensure that the State pension (contributory) deduction applies even where a literal reading of the scheme documentation suggests that it does not apply.

Both of these provisions are essential to avoid a situation where schemes have unforeseen and unfunded liabilities.  Trustees and plan sponsors will need to take advice in relation to whether section 59H is sufficient to be relied upon in practice.