One of the unusual features of the Irish pensions landscape is that, for many defined benefit (DB) schemes, employers may have the right to, in effect, 'walk away' from their obligations as sponsors by simply terminating their liability to contribute on immediate notice.
This feature of the DB pension sector in Ireland is one of the main reasons for the dramatic decline in DB pension schemes from circa 1500 in 2008 to just under 500 today.
The issue that was before the High Court in Amcor Pension Trust (Ireland) Company Limited By Guarantee v Amcor Holding No. 1 Limited [2025] IEHC 176 (Amcor Case) tested a question that went to the very core of that longstanding feature of the DB pensions regime in Ireland; whether a requirement to give reasonable notice should be implied into the provisions of a pension trust which allows an employer to terminate its liability to contribute by immediate notice?
The Facts
On 26 May 2022, the sponsoring employer of the Amcor Pension Scheme (Ireland) (Scheme) served notice on the trustees terminating its liability to pay contributions immediately. In a separate letter sent the same day, the employer offered a one-off contribution of €250,000 to the Scheme, subject to certain conditions, noting that the Scheme "comfortably meets the Funding Standard, with an estimated funding level of 114%".
However, the Scheme trustees disputed the validity of the termination notice and made a formal contribution demand on the employer for €4.75m, which the employer disputed. The trustees then initiated proceedings before the High Court to determine whether the employer was obliged to provide reasonable notice to the trustees before terminating its liability to contribute.
The Decision
Counsel for the trustees argued that, under a correct interpretation of the employer's termination power, the employer was required to give reasonable notice. The Court disagreed on that point.
The Court noted that when the deed's provisions are considered as a whole, it envisages that there may be insufficient funds to secure the benefits even where wind up is triggered by the employer issuing a termination notice. For that reason, the Court concluded that the interpretation argued by the trustees would involve rebalancing the provisions of the deed to prefer the position of the members over the employer. Doing so would involve constructing a contract the parties had not made. If the parties had intended to require the employer to provide reasonable notice, they could have simply made that clear in the wording of the clause itself.
The Court concluded there was no scope to interpret the deed in that way as it was not open to the Court to rewrite the terms of the deed.
The other argument made by Counsel for the trustees was that reasonable notice should be implied.
Applying the relevant case law on implying terms into a contract, the Court held that the requirement for reasonable notice was not "obvious" when the trust deed was created. The Court also concluded that it did not need to imply a term for reasonable notice for the Scheme to operate as intended; the deed envisages the employer terminating contributions even where there may be insufficient funds to secure the benefits.
The Court noted that introducing legislation similar to that in the UK would address the issue faced by the Scheme trustees; a deficit calculated on an insurance buyout basis becomes due under statute on the wind-up of a DB scheme in the UK. However, the Court acknowledged that introducing such legislation was a matter for the Oireachtas.
Conclusion
The provisions at the centre of the dispute in the Amcor Case are relatively common to many DB schemes in Ireland. For that reason, the decision will be welcomed by DB scheme employers, given that it brings some legal certainty to the question regarding whether their power to terminate contributions by immediate notice should be subject to a reasonable notice period.
The decision highlights the legally vulnerable position of trustees and DB scheme members where the employer's ability to terminate is not subject to a notice period. Helpfully, many DB schemes are currently well funded, so the 'walk away' risk may not be as serious a concern for trustees as it was in the past. However, trustees would be well advised to consider the implications of the Amcor Case carefully; there are steps that they can take now to mitigate its potential impact and protect the interests of scheme members.
It seems unlikely that the Oireachtas will decide to legislate to introduce a form of statutory debt in Ireland. Previous governments have not shown a willingness to do this, and even more modest reforms, such as introducing a statutory notice period, never made it beyond draft legislation.
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