EBS pension inquiry rules out breach by trustees

An investigation of the EBS building society pension fund has found that the trustees did not breach the rules of the plan but noted that a considerable number of errors had been corrected.

The investigation was carried out by the Irish Pensions Board based on concerns around the administration and augmentation of benefits and the lengthy delay in reporting a number of significant errors to EBS staff. Concerned staff had called for an independent investigation of the scheme, which has been administered by Irish Pensions Trust since the 1960s.

In the final report to the EBS pension scheme, which was prepared for the Pensions Board by accountant's KPMG, it said that, based on financial statements and other correspondence with auditors provided to it, the trustees had not breached the Pensions Act.

Under the Act, pension fund trustees are required to ensure that proper membership and financial records are kept. The report noted that a management letter dated December 31st, 1995, attached to financial statements had stated that these statements contained a "considerable number of errors".

The Pensions Board said, in view of the unqualified opinions issued by the auditors on each of the years, "it must be concluded that at least in all material respects, the issues arising with regard to the financial records were corrected".

It also investigated that augmentation of the benefits paid to one individual and concluded that the cost of this enhancement had been understated by £9,200 (€11,700). It also inquired into whether this early retirement pension should have been lower because of the reduction in the funding position of the scheme at September 1993.

"While we may differ in some respects as to the methodology adopted by the actuary in both instances, the trustees relied upon the advice of the plan's actuary and we would therefore not regard there being a breach by the trustees," the report states.

The Pensions Board also examined the payment made out of the fund to a non-member in 1996. This amount was subsequently repaid to the fund with interest. It concluded: "While there may have been an unintentional breach of Section 59 (c) of the Pensions Act in this instance, the plan has been compensated for the erroneous payments."

It also looked at the splitting of the plan in 1991, 1994 and 1995. The Pensions Board said it was impossible to determine whether the trustees received adequate legal advice in relation to this process, which was initiated at the request of EBS management. It found there were no breaches.

A spokesman for the EBS welcomed the Pensions Board's findings and said it was committed to the highest standards of corporate governance. He said the scheme has at all times been fully funded with assets of €29 million and liabilities of 19.8 million.

"At no stage were the entitlements of members of the scheme adversely affected in any way. The scheme provides defined benefits, underwritten by the Society, thus guaranteeing specific entitlements on retirement," he added.

Last year, the Pensions Board carried out 75 investigations into company pension funds.