A special allowance, exclusive of total gross earnings, has been payable to specific employees historically over a period of many years. This allowance was never calculated or considered reckonable for pension purposes. The Union, on behalf of the relevant employees, contends that this is unfair and is now seeking that the pay for these individuals is regularised as one payment to ensure their total gross earnings (inclusive of this allowance) is reckonable for pension purposes. What is the company’s obligations in such circumstances?Posted in : First Tuesday Q&A ROI on 5 March 2013
The Company’s obligations would depend on the both the provisions of the pension scheme and custom and practice. It will also depend on whether the pension scheme is a Defined Benefit or Defined Contribution Scheme.
If it is a Defined Benefit scheme, if the terms of the pension provide that the special allowance should not be reckonable for a pension, then the company is not legally required to allow such payments to be reckonable.
Where the Pension Scheme allows for the alteration of terms, employers may amend the rules of the scheme to allow such payments to be reckonable. If the Pension Scheme allows for flexibility in terms of the nature of payments which are reckonable for the
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Back to Q&A's This article is correct at 02/09/2015
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