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SIPTUPension Trustees Course
Cork – 10 March 2009
Andrew Nugent
Assistant Head of Information Services
The Pensions Board
Established by the Pensions Act, 1990
• Main functions are set out in the Act and include– to monitor and supervise the operation of the Act and
pension developments generally
• Promoting pensions development, information and awareness is an associated support function.
• Board conducts the National Pensions Awareness Campaign (NPAC) on behalf of Government as recommended in the “Securing Retirement Income” report of the National Pensions Policy Initiative published in 1998
The Pensions Board Focus
Three key operational areas:
• Supervision, regulation and enforcement
• Policy, legal and actuarial
• Information and awareness
Company Pension Scheme (99,802 schemes with 800,398 members)(66% DB schemes and 34% DC schemes)(Fund assets in excess of €80 billion (estimate))
Personal Retirement Savings Accounts (PRSAs)(Over 130,000 PRSAs with asset value of €1.25 billion- Dec 2007)(85,614 employers had signed up with a PRSA provider )
Personal Pension Plans and Retirement Annuity Contracts (RACs) (In excess of 200,000 contracts – Irish Insurance Federation)
Voluntary regime for supplementary pension provision
Types of Irish Private Pensions
Regulation, Supervision and Enforcement
• Pensions Board taking tough approach for breaches of the Pensions Act
• Board recently obtained a High Court judgement against an Irish company for €186,000 in pension arrears
• On the spot fines regime in place since September 2007. Fine for each offence €2,000
Board’s Powers
• Section 18 Authorisation – furnishing of information
• Section 58 Prosecution for non-remittance of deductions within 21 days
• Section 87 High Court order to have company pay ‘unpaid’ contributions to scheme
Trusteeship Review
• Report carried out by Board
• Presented to the Minister for Social and Family Affairs
• Launched in February 2007
Trustees Responsibilty In broad terms, trustees’ main duties under the Act are:
• to ensure contributions are received • to ensure contributions are remitted • to invest the funds• to pay the benefits• to ensure that Funding Standard is met• to keep records and accounts • to preserve or transfer benefits• to disclose information • to ensure equal pensions treatment • to apply the resources of the scheme on wind up • to register the scheme with the Pensions Board
Key Recommendations – Trustee Ability
To increase the standard of trustee ability, and therefore good governance!
Trustees Training Potential new means of training (e.g. e-learning)
should be explored Pension scheme administrators should be
registered and supervised
REGISTERED ADMINISTRATORS
Implements the recommendations in the Board’s Report to the Minister on Trusteeship
Report noted that third party administrators were unregulated in terms of scheme administration work undertaken on behalf of trustees
Recommended that scheme administrators should register with Board who would then have responsibility to:- audit administration service provision, and - remove registration or apply sanctions if required standards
are not met Pensions Act amended to bring administrators within its
remit in relation to certain core functions they perform
SOCIAL WELFARE AND PENSIONS ACT, 2008REGISTERED ADMINISTRATORS (RAS)
What’s Required? From 1 November 2008 trustees of every scheme (including large Trust RACs) must
appoint an RA to provide “core administration functions” Core administration functions are:
- preparation of annual reports- preparation of benefit statements- maintenance of sufficient and accurate member records to discharge above
No RA qualification specified but RA must be satisfied they are competent and capable of:
providing core administration functions have systems and procedures in place to deliver services
SOCIAL WELFARE AND PENSIONS ACT, 2008
REGISTERED ADMINISTRATORS (RAS)
What’s required Trustee can appoint themselves as RAs if they can fulfill above
requirements 1 member schemes must appoint RA for benefit statement/
records/Eurostat information RA can apply to be registered for either or both core
administration functions and must maintain records for function for which appointed
RAs also required to provide statistical information for Eurostat- applies to RA responsible for preparation of annual report if
more than 1 RA
SOCIAL WELFARE AND PENSIONS ACT, 2008REGISTERED ADMINISTRATORS (RAS)
Registration Process
Existing RAs registered with Board prior to 1 November 08 New RAs must register before commencing business
- registration period lasts 12 months RAs must complete form indicating:
- schemes for which they are applying to be registered
(including “frozen” schemes)- certify they are satisfied they are competent to provide
core administration functions to these schemes Overseas administrators must register as RA and provide
address in the State for service of notices and proceedings
SOCIAL WELFARE AND PENSIONS ACT, 2008
REGISTERED ADMINISTRATORS (RAS)
Registration Process RAs must renew their registration annually no
later than 30 days before anniversary of initial registration or renewal
No fee payable on registration or renewal Sample registration forms available on
Board’s website together with a note of Eurostat requirements
SOCIAL WELFARE AND PENSIONS ACT, 2008REGISTERED ADMINISTRATORS (RAS)
Non - Compliance and Sanctions Offence for RAs to fail to carry out core functions within time
limits specified
- within 8 months of scheme year end for annual reports
- within 1 month prior to date of issue for benefit statements
RAs who outsource still liable Sanctions for failure to perform core functions may include:
- prosecution (not on-the-spot-fines)
- subjecting RA to conditions on renewal of its registration
- refusal to renew the registration RAs can rely on third party defence apart from outsource
arrangement
SOCIAL WELFARE AND PENSIONS ACT, 2008
REGISTERED ADMINISTRATORS (RAS)
Non-Compliance and Sanctions (cont) Sanction depends on degree of non-compliance and number of
schemes in respect of which offence has been committed RA can appeal Board’s decision to terminate or refuse to renew
registration to High Court Criminal offence to carry out core functions without registering
with the Board Trustees still retain current duties under Pensions Act to provide
Annual Reports and Benefit Statements – where they fail to do so but can show they had taken
reasonable steps to secure compliance by RA, Board will not pursue trustees
On-the-spot fines
• Introduced in Social Welfare Law Reform and Pensions Act, 2007
• Came into force September 2007• Alternative to going to court• More efficient way of addressing compliance
issues• Board gives offender 21 days to remedy the
offence and pay the appropriate fine (€2,000)
On-the-spot fines
On-the-spot fines apply to a range of lesser offences under the Pensions Act, including:
• Failure to register a scheme with the Board • Failure to provide scheme members with
appropriate information • Failure to respond to requests for information
from the Pensions Board • Employers not advising employees of pension
or PRSA deductions
Current issues for pension schemes
• Charges
• Investment Climate
• Funding
• DB/DC/Hybrid…
Changing demographics
2006 2026 2056
No’s at Work 2,000,100 2,268,000 2,125,000
Aged over 65 464,000 844,000 1,532,000
No’s at work per person over 65
4.3 2.7 1.4
Changing world we live in
We are Living Longer
More Contract Work
More mobility in careers
Changing work patterns
More Part Time Working
Single Parent Households
Smaller Families
Separation/Divorce
Recent developments
• Green Paper on Pensions published in October 2007, followed by consultation phase which is now completed
• Commission on Taxation to consider how best the tax system can encourage long term savings to meet the needs of retirement
• Pensions also a commitment in Programme for Government
• Recent social partnership agreement which includes a commitment to produce legislation on the transfer of undertakings
Priority order on wind-up
• Cost of wind-up
• AVCs
• Pensioners in payment
• Active and deferred members
Further information
Pensions board website provides;
– Checklist which provides information and a questionnaire to help you inform yourself about how to provide for your retirement
– Pensions calculator allows you to estimate the amount of money needed to contribute to your pension in relation to your age yearly salary to end up with the level of pension you expect in retirement.
We all have a responsible role to play in…..
….actively promoting pensions take up !