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WHAT THE REGULATORS EXPECT WHAT THE REGULATORS EXPECT FROM PENSION FUNDSFROM PENSION FUNDS
Anne MaherChief ExecutiveThe Pensions BoardIreland 23 November 2005
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AgendaAgenda
Why we regulate
How we regulate
What regulators need from the regulated
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Why we regulateWhy we regulate
Because
“Pension funds are set up to serve as a secure source of funds for retirement benefits” (OECD)
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Why we regulateWhy we regulateTo Control commercial relationships between parties
whose knowledge or power is unequal Avoid risk of market failure of a financial
institution Enhance equity, adequacy and security Avoid abuse of any government tax
encouragements Influence pension take-upNot to Thwart good pension provision
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How we regulateHow we regulate Principles or rules based
Heavy or light prescription
Heavy or light supervision
Influenced by historical development
Influenced by national culture
All countries are different
EU Pensions Directive now requires minimum level
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What regulators need from the What regulators need from the regulatedregulated
Governance – to have well run pension funds
Accountability – to supervisor and stakeholders
Communication – to beneficiaries
Funding – to ensure liabilities are met
Co-operation and trust
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GovernanceGovernance Governing body Good repute Identification of responsibilities Understanding of responsibilities Expert advice Independent auditing/actuarial certification Internal controls Good administration/IT support Reporting Disclosure
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AccountabilityAccountability Produce
• Audited accounts• Actuarial valuations• Annual Reports
Make audited accounts / actuarial valuations / annual reports available to• Stakeholders • Regulators
Overall accountability to regulator High standard, timely reporting to regulator
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CommunicationCommunication
Fund information to beneficiaries
Personal information to beneficiaries
All information to be in clear, unambiguous language i.e. communication
Availability of ‘contact’ for beneficiaries
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FundingFunding
Expert advice
Funding plan in place
Regular independent verification
Regular monitoring
Meet regulators funding requirements
Ensure beneficiaries aware of funding position
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Co-operation and TrustCo-operation and Trust
Openness and transparency with regulator
Positive approach to regulation
No ‘avoidance’ of regulation
No regulatory arbitrage
Trust that regulator/pension fund have common objective
Foster trust in pension fund beneficiaries
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ConclusionConclusion
Regulators and pension funds have common objectives
Co-operation will achieve these objectives
TRUST YOUR REGULATOR!
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