On 18 July 2016 the Pensions Authority (the "Authority") published a consultation document on the “Reform and simplification of supplementary funded private pensions” in Ireland. This document proposes various aspects of reform which the Authority wishes to implement in future. The reform proposals are aimed primarily at defined contribution (DC) pension provision but are intended to apply equally to defined benefit (DB) provision.
In the consultation document the Authority sets out a package of reform proposals (some of which will be required under the forthcoming EU IORP II Directive) in order to meet the Authority's significant reform objectives. The reforms envisage a revised regulatory framework to include:
- Higher standards of training and qualification, and minimum experience requirements, for trustees of occupational schemes
The proposals include changes to mandatory requirements for trustees on a collective basis, including the introduction of continuous professional development (CPD) for trustees. The Authority is not however seeking to “professionalise” pension scheme trusteeship, and acknowledges that non-professional or lay trustees can contribute significantly to the role of trustee and scheme administration generally.
- An authorisation process for new occupational pension schemes
This would allow the Authority to evaluate information submitted to it for the commencement of new schemes and to determine whether schemes should be authorised or not. Such a process would replace and be more pro-active than the largely passive scheme pre-commencement/registration process which applies at present.
- Closer supervision of pension scheme management
The proposals include allowing the Authority to create binding codes of practice for areas of trustee responsibility. This would enable the Authority to monitor trustees’ ongoing management of a scheme more effectively and is in line with the Authority’s move towards a more prospective (i.e. before, rather than after, the event) basis of supervision.
- Rationalisation of the number of pension savings vehicles
The suggestion by the Authority is that cessation of Retirement Annuity Contracts (RACs) and buy-out bonds (BOBs) from a given date would help simplify the pensions landscape. The Authority also intends to review its oversight of Personal Retirement Savings Accounts (PRSAs).
- Master trusts
The Authority wants to see an overall reduction in the number of schemes and in this context the role of master trusts for multi-employer type arrangements is included for discussion. The intention is that master trusts could be used to facilitate the rationalisation of pension schemes as well as in the implementation of universal retirement savings.
One of the aims of the Pensions Authority is to construct a streamlined and simplified pensions system and a foundation for the introduction of a universal retirement savings scheme (which the Minister for Social Protection, Leo Varadkar, has said is a long term policy objective of his Department). Many of the recommendations for reform are at an early stage and are to be fully deliberated throughout the consultation process. Submissions were sought by 3 October 2016 on the issues and specific questions raised in the consultation document and we are aware that certain bodies such as the Association of Pension Lawyers of Ireland have responded.