Statement of Reasonable Projection for DC schemes
A Statement of Reasonable Projection (“Statement”) is an estimate of the expected level of benefits at a scheme member’s normal retirement date, based on the contributions paid and proposed contributions. As of 1 July 2009 a Statement must be included in a member’s annual benefit statement. The trustees must also provide a Statement when a person becomes a member of the scheme, a transfer in is received in respect of a member, or where there is a material alteration of the scheme benefits. It is anticipated that the Pensions Board will issue guidance notes on this in the coming weeks.
Bulk Transfer between schemes
Section 59E of the Pensions Act sets out the duties of trustees in connection with a bulk transfer. Regulations have recently been introduced which prescribe the consultation and information requirements imposed on the trustees of the transferring scheme, before a bulk transfer can take place. The Regulations apply in the case of a bulk transfer where, member consent is not obtained and irrespective of whether the scheme is ongoing or in wind up. The trustees of the transferring scheme are required to provide the following information to transferring members, at least two months prior to the proposed date of the transfer:
- the circumstances giving rise to the transfer;
- the benefit structure of the transferring and receiving schemes (including any discretionary benefit practice of both schemes);
- details of the benefits that are to be granted to transferring members;
- any adverse consequences of the transfer for transferring members; and
- an actuary’s statement where the transferring scheme is a defined benefit pension scheme. For example; the actuary must provide details in relation to the manner in which benefits will be calculated in the receiving scheme and confirmation that were the receiving scheme to be wound up immediately after the bulk transfer, the payment from the receiving scheme would be at least equal to that received from the transferring scheme.
Transferring members (or an authorised trade union) are entitled to make observations up to one month before the date of the proposed transfer. The trustees and/or the employer as the case may be are required to give due consideration to any observations received prior to making the transfer, but are not bound by any observations made.
As a consequence of the global economic crisis the investment experience of most pension schemes has been disastrous in 2008/2009. Many defined benefit pension schemes have failed the Minimum Funding Standard and are struggling to restore the scheme’s solvency by the date of the next Actuarial Funding Certificate. To assist trustees and employers, the Pensions Board has stated that it will consider applications for extended funding periods under Section 49(3) of the Pensions Act. In February this year, the Pensions Board published guidelines setting out the circumstances in which it will consider granting such an extension and these can be accessed through their website www.pensionsboard.ie
It had been expected that Regulations relating to the new requirements for compulsory trustee training, as set out in the Social Welfare and Pensions Act 2008, would be published by the Minister for Social and Family Affairs during the course of 2009. At the time of writing, no regulations have been published. Once introduced employers will be obliged to ensure that appropriate measures are in place to ensure that trustees will receive the training as prescribed by the Regulations. We will provide an update on this in future bulletins.
The Financial Measures (Miscellaneous Provisions) Act 2009
The Financial Measures (Miscellaneous Provisions) Act 2009 (the “Act”) was signed into law on 26 June 2009. The Act makes provision for the transfer of the assets of certain University pension funds and other State bodies to the National Pension Reserve Fund. These assets will be managed by the National Treasury Management Agency as part of the Reserve Fund. After the transfer, funding of the benefits provided under these schemes will be met on a “pay-as-you-go” basis by the Irish Government. It is intended that the transfers will take place in 2009 and 2010.