Pensions Ombudsman ‘strayed well outside his jurisdiction’, says judge

Case concerned NTMA employee who challenged public service pension cuts

The Pensions Ombudsman "strayed well outside his jurisdiction" when he found in favour of a National Treasury Management Agency (NTMA) employee who complained about a pension cut resulting from the Government's 2010 emergency financial measures, a High Court judge has found.

While the Ombudsman was motivated to correct what he perceived as an unfairness to NTMA employee Jim Farrell, the Ombudsman was not entitled to disapply the provisions of the 2010 Financial Measures in the Public Interest Act enacted in response to the economic crisis, Mr Justice Seamus Noonan said. The Act implemented sliding scale cuts to all public service pensions.

The Ombudsman was “not entitled in any sense” to review the Minister for Public Expenditure and Reform’s refusal to exempt Mr Farrell from the cut or to substitute the Ombudsman’s decision on the merits for the decision of the minister, the judge said.

Inappropriate appeal

However, the necessary corollary of that “departure” meant the Minister’s appeal against the Ombudsman’s decision was inappropriate, the judge said.

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Mr Justice Noonan said Mr Farrell worked much of his life in the private sector before joining the NTMA in 1990.

He joined the agency’s pension scheme in 1996, transferring the entire proceeds of his private pension to it.

The pension entitlement which resulted amounted to 62.7 per cent coming from his private pension and the remainder attributable to his service with NTMA.

In 2010, the Government introduced the emergency financial legislation leading to cuts to all public service pensions, including Mr Farrell’s. This involved a cut of almost €23,000 a year to his pension entitlement.

Property confiscation

Mr Farrell had complained the cut should only have applied to the NTMA element of his pension (37.3 per cent) and not his private pension, which would have meant a cut of €4,405. He claimed this was a confiscation of private property and the exchequer was making a profit at his expense.

The NTMA raised the matter with the Minister for Finance who said the fact he had transferred cash into the NTMA scheme in 1996 did not “materially distinguish” his pension from very many public servants who bought into State schemes.

Mr Farrell contacted the Pension Ombudsman who then wrote to the Minister for Public Expenditure and Reform, who also refused to exempt him.

Further efforts were made to resolve the matter by the Ombudsman who in July 2013 determined only the 37.3 per cent element of his pension should be subject to the cut although this was not to be taken as a precedent for anyone not in exactly similar circumstances.

The Minister appealed to the High Court arguing the Ombudsman acted outside his powers and jurisdiction and that the cut applied to the entirety to the pension of Mr Farrell.