Transcript Public Sector Schemes

The Pensions Act, 1990
Implications for Public Sector
Schemes
Carol Jordan
Assistant Head of Regulation
The Pensions Board
21 May 2009
The Pensions Acts 1990 - 2008
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1
Part I
Part II
Part III
Part IV
Part V
Part VI
Part VIA1
Part VII2
– Preliminary and General
– Establishment of Pensions Board
– Preservation of Benefits
– Funding Standard
– Disclosure of Information
– Trustees of Schemes
– Registered Administrators
– Equal Treatment
Introduced by the Social Welfare and Pensions Act, 2008
2 Introduced by the Social Welfare Act, 2004
The Pensions Acts 1990 - 2008
• Part VIII3
• Part IX3
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– Compulsory and Voluntary Reporting
– Miscellaneous Applications to the High Court
Introduced by the Pensions (Amendment) Act, 1996
• Part X4
• Part XI4
• Part XII5
– Personal Retirement Savings Accounts (PRSA’s)
– Pensions Ombudsman
– Cross Border Schemes
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Introduced by the Pensions (Amendment) Act, 2002
5 Introduced by the Social Welfare and Pensions Act, 2005
• Social Welfare Law Reform and Pensions Act, 2006
• Social Welfare and Pensions Act, 2007
• Social Welfare and Pensions Act, 2008
The Pensions Act and Public Sector Schemes
Subject to:
• Part I
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Preliminary and General
» Definitions
» Pension Scheme (Family Law) Regulations, 1997
• Part II
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The Pensions Board
» S25 Fees Payable to the Board
• Part V
• Part VI
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Disclosure of Information
Trustees of Schemes
» Scheme Registration Only
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Part VII
Part VIII
Part X
Part XI
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Equal Pension Treatment
Compulsory and Voluntary Reporting
Personal Retirement Savings Accounts (PRSAs)
Pensions Ombudsman
The Pensions Act and Public Sector Schemes
Exempt from:
• Part III
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Preservation of Benefits
• Part IV
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Funding Standard
• Part VI
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Trustees of Schemes : General Duties of Trustees
• Part VIA -
Registered Administrators
• Part XII
Cross Border Schemes
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The Pensions Act and Public Sector Schemes
Functions of the Pensions Board – Part II
• To monitor and supervise the operation of the Act
• To issue guidelines/codes of practice to trustees on
their duties and responsibilities
• To issue guidelines/guidance notes on duties and
responsibilities of administrators and PRSA providers
• To encourage training for trustees
• To advise the Minister on standards for trustees and
on their implementation
The Pensions Act and Public Sector Schemes
Functions of the Pensions Board – Part II
• To provide information to members on their rights under
the Act
• To investigate complaints and, if necessary, impose
fines or take court proceedings for breaches of the Act
• To register schemes, large trust RACs and PRSAs and to
collect fees due
• To advise the Minister for Social And Family Affairs on
the operation of the Act and on pensions matters
generally.
The Pensions Act and Public Sector Schemes
Compliance Obligations
• Main responsibilities fall on trustees or, for schemes not
established under trust, on ‘Administrator’
• Definition of ‘Administrator’ is set out in s13(1) of the
Taxes Consolidation Act, 1997:
“Administrator in relation to a retirement benefits scheme
means the person or persons having the management of
the scheme…”
• Who is the ‘Administrator’ of your scheme?
– They are responsible for Pensions Act compliance.
The Pensions Act and Public Sector Schemes
Scheme Registration and Amendments
• Schemes must be registered with the Board not later
than 1 year after commencement
• Joint Revenue Approval/Pensions Board Registration
form
• PB Number is allocated to the scheme
• Any changes to the registered details must be notified
to the Board, in writing, within 12 months of the
change
The Pensions Act and Public Sector Schemes
Payment of Pensions Board Fees
• Annual fee must be paid in respect of each scheme year by
31 March each year
• Fee is based on the number of active members in the
scheme at the renewal date in the previous year
• Fee Payable: (represents 40% of normal fee)
 Less than 500 actives €3.80 per member
 501 – 1000 actives
€1,900
 More than 1000 actives €1.90 per member
The Pensions Act and Public Sector Schemes
Pension Schemes (Family Law) Regulations
S.I. No. 107 of 1997 – Part I
• Regulations made under s5 of the Pensions Act specify guidelines for
the purpose of pension provisions of Family Law Acts (1995 & 1996)
• Family Law Acts require courts to take pension rights into account
where parties apply to court for an order under the Act
• Court may direct Pensions Adjustment Order (PAO) be served on
scheme of which either/both spouses are members
• PAO must be given effect by trustees/administrator
• PAO requires trustee/administrator to pay a proportion of pension
benefits to other spouse or for benefit of dependant family member
• PAO overrides the rules of the scheme.
The Pensions Act and Public Sector Schemes
Pension Schemes (Family Law) Regulations
S.I. No. 107 of 1997 – Part I
• Pension benefits for PAOs fall under one or other of two headings:
Retirement Benefits
– Pensions, lump sums/gratuities
– Dependants benefits on death in retirement
– Periodic increases to pensions in payment
– Deferred benefits
Contingent Benefits
– Death in service benefits
– Lump sum benefits
– Dependants pensions
• Court can make either or both types of order
The Pensions Act and Public Sector Schemes
Pension Schemes (Family Law) Regulations
S.I. No. 107 of 1997 – Part I
PAOs – Public Sector Schemes
• Orders can straddle both main scheme and spouse’s and
children’s schemes
• PAO in relation to retirement benefits would cover:
(a) pension and lump sum (or preserved pension and lump
sum, or preserved death gratuity) payable under the
main scheme, and
(b) where member dies after retirement or resignation,
pensions payable under the spouse’s and children’s
scheme.
The Pensions Act and Public Sector Schemes
Pension Schemes (Family Law) Regulations
S.I. No. 107 of 1997 – Part I
• PAO in relation to Contingent Benefits could cover
both:
(a) death in service gratuity payable under the main
scheme, and
(b) where the member dies in service, pensions
payable under the spouse’s and children’s scheme.
The Pensions Act and Public Sector Schemes
Disclosure of Information – Part V
• Details are set out in the Act and Disclosure of Information
Regulations 2006 – 2008
• Trustees/Administrators must give members, prospective members,
their spouses, other scheme beneficiaries and authorised trade unions:
– Details about constitution of scheme and rules (i.e. legal governing
documents)
 On request
– Basic information about the scheme (i.e. explanatory booklet)
 On request (but automatic to new members within 2 months of
joining)
– Details of personal benefit entitlements (i.e. benefit statement)
 Annually - automatically
The Pensions Act and Public Sector Schemes
Disclosure of Information – Part V
• Benefit Statement:
– Based on information not more than 6 months old
– Statutory schemes can provide electronically if members
consent and have access to this facility
– Benefit statement must include information on whether
additional benefits can be secured, purchased or granted by
way of any, or all, of the following:
(i) notional service;
(ii) AVCs; or
(iii) transfer of rights from another scheme/PRSA.
The Pensions Act and Public Sector Schemes
Disclosure of Information – Part V
• Other documents that must be disclosed:
– Annual report (limited information) On request
(but availability must be notified to members)
– Actuarial valuations
On request
(if a funded DB scheme)
– Valuation of liabilities
On request
(if a DC scheme)
– Annual audited accounts
On request
(not applicable to public sector)
– Employer must give employees a monthly statement of pension
contributions deducted and remitted on their behalf.
The Pensions Act and Public Sector Schemes
Disclosure of Information – Part V
Other documents that must be disclosed:
– Leaving service options letter
Automatically to leavers within 2 months of leaving
– On retirement or death
Automatically to persons entitled to benefits within 2 months
– Notification of grant of PAO
Automatically to persons specified in order within 2 months
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Failure to comply with disclosure obligations is subject to onthe-spot fines.
Detailed Guidance Notes and information booklet on disclosure
obligations also available online.
The Pensions Act and Public Sector Schemes
Equal Pensions Treatment – Part VII
• Original Part VII prohibited discrimination on gender
ground only
• New Part VII introduced by SW (Misc. Provisions) Act,
2004 provides for equal pension treatment on 9 grounds:
– Gender, marital status, family status, sexual orientation,
religion, age, disability, race and membership of the
travelling community.
• Claims for redress: The Office of the Director of Equality
Investigations (ODEI)
The Pensions Act and Public Sector Schemes
Equal Pensions Treatment – Part VII
• No discrimination on any discriminatory grounds in respect of any rule
of a scheme
• Rules governing employer obligations re:
 Access
 Contribution arrangements
 Benefits
 Retirement ages*
 Survivors benefits
*Ages can be fixed for admission/benefits provided no gender discrimination
• Detailed Guidance Notes and Information Booklet available on Board’s
website.
The Pensions Act and Public Sector Schemes
Compulsory & Voluntary Reporting – Part VIII
• ‘Whistleblowing’
• Duty placed on ‘relevant persons’ to report
– instances of fraudulent conversion, or
– material misappropriation of scheme assets
• Which they believe
– has occurred
– is occurring
– is to be attempted.
The Pensions Act and Public Sector Schemes
Compulsory Reporting
• Relevant Person is:
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An auditor
An actuary
A trustee/administrator
An insurance intermediary
An investment business firm
A person preparing/instructed to prepare the Annual Report
A person appointed by trustees to carry out specified duties
A PRSA provider, actuary or auditor of the business of a PRSA provider
An employee of a s121 employer – “excluded employee”
• Obliged to make compulsory report
(doesn’t apply to information obtained prior to 2 July 1996)
The Pensions Act and Public Sector Schemes
Compulsory Reporting
• Relevant Person
• Suspected fraud/misappropriation of resources of
scheme/PRSA
• Report in writing as soon as possible (offence not to report)
• Defence for relevant person to show contravention applicable
to another and reasonable steps taken to secure compliance
• Protection for persons acting in good faith
• No liability or action will arise, e.g. defamation proceedings.
The Pensions Act and Public Sector Schemes
Voluntary Reporting
• Any person whether or not a relevant person
• Any matter concerning state and conduct of scheme or
PRSA e.g. maladministration
• Report in writing or otherwise
• Protection against unfair dismissal provided report
made in good faith
• No liability or action will arise
The Pensions Act and Public Sector Schemes
PRSAs – Part X
• Every employee must be provided with access to some form of
pension provision
• If no provision in employers scheme for AVCs, a Standard PRSA must
be offered for AVC purposes
• PRSA Provider should be designated and employees informed
accordingly
• If employees elect to make AVCs to a PRSA this must be facilitated
through payroll
• Where AVCs are to be paid, the trustees/administrator must ensure that
contributions are limited to the amount required to provide maximum
benefits permitted by Revenue
• Information booklets on employer obligations and a Consumers Guide
to PRSAs available on Board’s website
The Pensions Ombudsman and Public Sector
Schemes – Part XI
• PO investigates and decides complaints and disputes concerning
occupational pension schemes and PRSAs
• Complaints usually made against those responsible for management of
scheme/PRSA e.g. trustees, managers, employers, administrators etc.
• Complaints involve allegation that individual has suffered financial
loss due to maladministration of the scheme/PRSA
• PO also investigates disputes of fact or law re schemes/PRSAs
• Pensions Act requires all schemes/PRSAs to operate an Internal
Dispute Resolution Procedure (IDR)
• PO cannot, as a rule, investigate complaint/dispute until IDR process
completed
The Pensions Ombudsman and Public Sector
Schemes – Part XI
• IDR system requires details of complaint to be given to ‘Relevant
Person’
– Private sector = trustees
– Public sector = the Minister or Ministers to whom there is a right of appeal
• ‘Relevant Person’ issues Notice of Determination within 3 months of
obtaining all necessary information
• Complainants not bound by determination and can still complain to PO
• PO has discretion to bypass IDR but not for Public Authority Schemes,
i.e. schemes governed by statute or funded from public monies, in
which there is provision for appeal to Minister(s). Includes most of
broader public service (exceptions - Local Govt. Superannuation
Scheme, Garda Síochána scheme).
The Pensions Ombudsman and Public Sector
Schemes – Part XI
• If complaint/dispute sent to PO he will decide if matter is appropriate
for him and may require further information from parties
• Often gives ‘Preliminary View’ to all parties in complaint/dispute
giving them opportunity to provide further information/evidence
• ‘Final Determination’ made which may award financial compensation
(limited to the amount of the actual loss)
• PO determination is final and can be appealed to High Court
• Time limits for bringing complaint/dispute:
 6 years from date of act or event giving rise to complaint/dispute
 3 years from date on which complainant aware/ought to have been aware
 PO may extend period if reasonable grounds
www.pensionsombudsman.ie
The Pensions Act and Public Sector Schemes
Pensions Board Approach to Regulation
Historical Approach
• Encouraged broad compliance with Pensions Act
• Reflected
– Large number of schemes
– Lack of previous pensions legislation
– Policy of encouraging voluntary supplementary pension provision
• Heavy reliance on disclosure of information provisions
• Gradual move towards stricter policy of expecting full
compliance
• Required shift from reactive to pro-active approach
The Pensions Act and Public Sector Schemes
Pensions Board Approach to Regulation
Current Approach
• Pro-active approach since 2007 following Operational Review
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international best practice in supervisory field
need to have regard to principles of regulation
risk based model
direction of resources to most suitable areas
• Involves
– supervisory approach based on hierarchy of risk priorities, and
– pro-active engagement with regulated entities and their
administration providers.
The Pensions Act and Public Sector Schemes
Pensions Board Approach to Regulation
Key Objectives
• To ensure that:
– No pension monies are misappropriated
– Beneficiaries receive their full entitlements
– Schemes are appropriately funded
– Pension assets are appropriately invested
– Members are provided with enough information to
make appropriate decisions
The Pensions Act and Public Sector Schemes
Pensions Board Regulatory Activity
• Activities are aligned to regulatory priorities and include:
– *Annual interaction with range of funded DB schemes and
unfunded public sector schemes
– Annual interaction with scheme administrators/pension providers
– Particular interaction with DB schemes failing the funding
standard
– *Compliance audits – both provider audits and scheme audits
– *On-the-spot fine investigations
– *Section 18 investigations – on-site and off-site
– *Prosecutions – as necessary
*All relevant to public sector schemes
The Pensions Act and Public Sector Schemes
Pension Board Regulation Function
• One supervisory function – Regulation
• PRSA supervisory process streamlined and integrated
into ongoing provider contact
• Scheme registration (and the Register of schemes)
now comes within the Regulation function
• Portfolio system adopted for DB schemes (including
public sector schemes) and pension providers
• ‘Open Door’ policy remains
The Pensions Act and Public Sector Schemes
Sanctions for Non-Compliance
• On-the-spot fines for specified breaches
• Mainly administrative type breaches:
– Late registration of schemes
– Failure or delay in notifying amendments to the Board
– Disclosure of information – failure to provide required/requested
information
– Failure to reply to a Board request for information
– Failure or delay in submitting AFCs (for funded DB schemes only)
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Fine for each offence is €2,000 per trustee/administrator
Fine cannot be paid out of the resources of the scheme
More serious breaches of the Act will continue to be dealt with in the
Courts
The Pensions Act and Public Sector Schemes
Further Information:
• www.pensionsboard.ie
• Guidelines
• Guidance Notes
• FAQs
• Information Booklets
• Presentations