An employer with two pension schemes which were both in surplus wound up one scheme and took for itself the €1 million surplus in the scheme.

The Pensions Ombudsman said the section of the Pensions Act used to allow the transfer had not been intended to be used in such a way.

The "waters were further muddied by the fact" that one person was actuary to the scheme, consultant to the employer, and a representative of the corporate trustee on both schemes, "a clear failure by the firm concerned to identify, let alone deal with, an obvious conflict of interest".

Three identical complaints were received by the ombudsman from employees whose entitlements were transferred from the wound-up scheme. However, the ombudsman found that the complainants were not disadvantaged as they had not yet incurred any financial loss.

In fact, the members of the wound-up scheme were given the position of being first in order of priority if the second scheme was wound up. This meant that the members of the receiving scheme ended up in a less secure position than they had been prior to the transfer, the ombudsman said.