Briefing note on the Pensions Act amendments included in the Social Welfare and Pensions Act 2008
These briefing notes are prepared on a section by section basis and are best read in conjunction with the Social Welfare and Pensions Act 2008 (the 2008 Act). Read the Social Welfare and Pensions Act 2008 on the Department of Social and Family Affairs website.
The 2008 Act, which was signed into law on 7 March 2008, makes various amendments to pensions legislation. It provides for a number of changes to the Pensions Act 1990 (“the Act”) in particular in relation to registered administrators and trustee training. It also clarifies the definition of a defined contribution scheme and provides for minor miscellaneous and grammatical amendments to the Act. The following is a brief explanation of the main provisions of the 2008 Act:
Part 3 of the 2008 Act:
- amends section 2 of the Act by inserting new definitions consequential on the regulation of registered administrators and the imposition of a requirement for ongoing trustee training. These include definitions of one-member arrangement, outsourcing arrangement, pension adjustment order, pensioneer trustee, professional trustee, trustees and registered administrator.
- amends section 3 (of the Act) to apply the offences regime to registered administrators. The amendment also prevents a registered administrator from relying on the defence provided by that section, where the registered administrator has outsourced the provision of the “core administration functions” to a third party and that third party has failed to perform the service for which it was contracted.
- amends section 3A to exclude registered administrators from the on-the-spot fines regime.
- amends section 18 to provide the Board with the power to inspect or investigate whether the registered administrator is carrying out his duties in accordance with the Act and/or to require a registered administrator to furnish the Board with such information, explanations, books of account and other documents as may be required. The Board’s investigation or inspection may relate to a single scheme or trust RAC for which the registered administrator is appointed or it may relate to the activities of the registered administrator in his capacity as such.
- amends section 54 to allow the Board to request registered administrators to furnish information to the Board relating to their conduct and activities as registered administrators within time limits specified by the Board. Section 54 will now also provide that, for the purposes of preparing annual benefit statements, the trustees of a scheme or large trust RAC must appoint a registered administrator. The section also provides that the appointment of a registered administrator does not relieve the trustees of their obligations. Section 54 is also being amended to include registered administrators for the purposes of allowing information to be furnished between the trustees, an employer, the auditor, the actuary and the registered administrator of a scheme, or as appropriate a large trust RAC.
- amends section 55 of the Act by inserting a new subsection (1A) to provide that for the purposes of preparing an annual report, the trustees of a scheme must appoint a registered administrator. It should be noted that a trustee may itself apply to the Board to be appointed as the registered administrator for a scheme or trust RAC where it meets the requirements of Part VIA of the Act.
- amends section 59 of the Act to provide that the trustees of schemes or trust RACs (other than a small trust RAC) have an obligation to ensure that at all times a registered administrator is appointed to perform the core administration functions. It is permissible for a scheme or trust RAC to appoint one registered administrator to prepare the annual report and a different registered administrator to prepare the annual member benefit statements. The Board may also permit more than one registered administrator to perform a single core administration function, such as producing benefit statements, but only where that situation pertained prior to the commencement of the registered administrator provisions of the 2008 Act and subject to such conditions as the Board considers appropriate.
It is envisaged that all administrators currently providing core administration functions to schemes and trust RACs who wish to continue supplying those services will register with the Board prior to the registered administrator provisions of the 2008 Act commencing on 1 November 2008. Details on how to register will be provided by the Board in advance. Finally there is no need for trustees to specifically appoint persons who they have already engaged to carry out the core administration functions as long as the arrangement between the trustees and the current service provider has effect beyond 1 November 2008.
- inserts a new Part VIA in the Act.
Part VIA of the 2008 Act provides as follows:
- Section 64B provides for definitions including the definition of “core administration functions” and the “Register of Administrators”.
- Section 64C states that the Board shall establish a Register of Administrators with the names and addresses of all registered administrators. It is proposed that the Register shall be available online for inspection by the public.
- Section 64D relates to the registration of registered administrator. Under this section, a person must register with the Board as a registered administrator before acting in that capacity to a scheme or large trust RAC. An application form must be completed and submitted to the Board by a person intending to provide core administration functions to trustees. The Board will notify the applicant in writing of its decision and of the reasons for it. Application forms will be available on The Pensions Board website.
- Section 64E relates to the renewal of registration of a registered administrator. Under this section, an application for renewal of registration must be completed and submitted to the Board by the registered administrator not less than 30 days prior to the end of each registration year. The Board has authority to decide to renew the registration, not to renew the registration or to renew it subject to conditions, such as restricting the registered administrator to providing core administration functions only to trustees for whom they provided these services in the previous year. The Board may consider a late application for renewal of registration. Where it decides to accept a late application, the renewal will take effect from the expiry of the previous registration period. The Board will in all circumstances notify the applicant in writing of its decision.
- Section 64F specifies that the following people are disqualified from acting as a registered administrator: an undischarged bankrupt; a person who has made an arrangement with his creditors which has not yet been discharged; a person convicted of fraud or dishonesty; a person who is restricted under section 150 of the 1990 Companies Act from acting as director or secretary of a company and a company for whom that person is appointed a director or secretary. The section also prevents a person who has previously been a registered administrator and whose registration was terminated from applying again for registration within 12 months from the date of termination.
- Section 64G relates to the duties of a registered administrator. These are described as “the core administration functions” and are the preparation of the annual report and the annual benefit statements on behalf of the trustees of the scheme. These documents must be given to the trustees at least one month before the trustees are required by law to make these documents available. In addition the registered administrator is responsible for keeping accurate and sufficient records of members and their entitlements and for such other duties as the Minister may from time to time prescribe in regulations. The new section also provides that if a registered administrator becomes disqualified from acting in that capacity he or she shall notify the Board and the scheme trustees immediately. Registered administrators will at all times be fully responsible for discharging their obligations under the Act even where they have outsourced the performance of those functions. To prevent registered administrators from withdrawing services to trustees at short notice, a 90 day notice of termination of any administration services agreement will be required for both trustees and registered administrators, except when the Board has decided to terminate or not renew the registration.
- Section 64H relates to the termination of registration of a registered administrator. The Board may terminate the registration of a registered administrator where the registered administrator has expressly requested the termination, has failed to comply with the requirements under the Act, has not complied with a restriction imposed by the Board or is disqualified from acting as a registered administrator. The Board shall notify the registered administrator of the termination and the reasons for same as soon as practicable in writing.
- Section 64I relates to appeals. Where a registration has been refused, has not been renewed, has been terminated or has been made subject to conditions, the registered administrator has 21 days (or such longer period as the High Court decides) to appeal. The decision of the Board does not take effect until 21 days after the Board’s notification of its decision to the registered administrator or until any appeal is heard, whichever is the later. The High Court may confirm, vary or annul the decision of the Board and make any order in respect of costs.
- Section 64J relates to offences. Where an offence relating to a registered administrator has been committed under the Act outside the State, it shall be deemed to have been committed in the State and any relevant proceedings may be taken in any place in the State.
- Section 64K, requires that a registered administrator must provide to the Board an address in the State which will be placed on The Register of Administrators by the Board. This gives the Board jurisdiction over registered administrators who are based outside of Ireland. Any notice required under the Act will be served by the Board either personally or by post to the registered administrator at the address in the state furnished to the Board.
- Section 64L provides that where the Board terminates the registration of a registered administrator, decides not to renew its registration or decides to renew its registration subject to one or more conditions, it will be obliged to publish notice of this fact in Iris Oifigiuil and in one or more newspapers circulating in the State within 28 days of such termination, non-renewal or renewal subject to conditions. Where the registered administrator appeals the decision of the Board within 21 days of being notified by the Board of its decision, the Board will not publish a Notice in Iris Oifigiuil until the Court decides the matter.
- Section 64M provides that the registration does not imply that the registered administrator is approved for the provision of administration services and no liability will attach to the Board.
- Section 64N provides that where the Board either terminates a registration or decides not to renew a registration, its decision shall not operate to discharge any liabilities of a person who has acted as a registered administrator.
- Section 64O relates to the obligations of a registered administrator following notification from the Board. Where a registered administrator has received a notification of termination, non-renewal or renewal subject to conditions from the Board, it is obliged to notify the relevant trustees of the scheme or trust RAC of the notice and its contents. In the case of termination or non-renewal, the registered administrator is obliged not more than two months from the date of such notification, to arrange for the transfer of all information relating to the scheme or trust RAC to the new registered administrator nominated by the relevant trustees. Where an appeal is lodged by the registered administrator against the Board’s decision the requirements of this section do not apply until the outcome of the appeal is decided.
- Section 64P provides that a service or product shall not be marketed in such a way as to make the purchase of that service or product dependent on the purchase of the services of a particular registered administrator or vice-versa.
Application of Part VIII (whistleblow provisions) to registered administrators
Section 28 of the 2008 Act:
- amends section 82 of the Pensions Act by including a registered administrator as a “relevant person” for the purposes of Part VIII of the Act. This allows the disclosure and reporting obligations to the Board under the Act to apply to registered administrators.
- amends section 83 to confirm that the compulsory whistleblowing obligation referred to in section 83(1) of the Pensions Act does not apply to any belief formed as a result of information obtained by a registered administrator prior to 1 November 2008.
- amends section 126 of the Pensions Act by including a registered administrator as a “person responsible for the management of an occupational pension scheme” for the purposes of all of Part XI of the Pensions Act. This allows for the Pension Ombudsman’s powers under the Act to apply to registered administrators.
New trustee training provisions
Section 28 of the 2008 Act:
- provides for amendments to the Pensions Act in relation to trustee training as recommended by the “Report of The Pensions Board to The Minister for Social and Family Affairs on Trusteeship’’. As a result of the amendments employers are required to arrange trustee training for each trustee within six months of their appointment and at least every two years thereafter. Where a person is already a trustee at the time the legislation commences, there is no requirement on the trustee to undertake training within 6 months. The ongoing two year training requirement does however apply. Where an employer breaches the obligation to provide regular training it may be prosecuted. Employers are not under an obligation to provide training to professional trustees and pensioneer trustees, it is expected that such trustees will undertake regular training to keep their skills current.
- Where a trustee fails to undertake the required training, section 3A has been amended to allow the Board to apply an on-the-spot-fine.
- Trustees are required as a result of an amendment to section 54(1) to confirm in the Annual Report that they have undertaken the required training and to confirm that they have access to the latest addition of the Board’s Trustee Handbook. The training undertaken must cover the Pensions Act and regulations, duties and responsibilities of trustees both under the Act and at common law and effective management of a scheme or trust RAC.
Section 29 of the 2008 provides for a number of miscellaneous amendments to The Pensions Act which are mainly technical in nature. The principal amendments include:
- amendment of section 2 of the Act by inserting a revised definition of “defined contribution scheme” . The new definition clarifies that schemes that offer guaranteed benefits or investment performance do not constitute defined contribution schemes. The definition also clarifies that the fund value available to an individual member is based on the value of contributions and investment returns after deducting appropriate charges.
- amendment of section 4(1) allowing the Revenue Commissioners and The Pensions Ombudsman to exchange information;
- amendment of section 54 of the Act to require trustees of small trust RACs to provide certain statistical information to the Board annually in respect of their schemes. This statistical information is required to enable Ireland to fulfill its obligations under an EU Council Regulation which requires information on pension schemes to be furnished to Eurostat for scheme years commencing on or after 1 January 2008. It is proposed that registered administrators will be required to furnish the relevant statistical information for schemes and trust RACs where they have been appointed to act.
- amendment of section 141(4) of the Act in relation to the enforcement of determinations made by The Pensions Ombudsman to include the registered office or the place of business of a person against whom a determination has been made.
- Schedule 2 makes minor textual and grammatical amendments.
- Finally section 30 and section 31 of the Act provide that the definition of “defined contribution scheme” as set out in the Family Law Act 1995 and the Family Law (Divorce) Act 1996 is amended to correspond with the new definition of “defined contribution scheme” in the Pensions Act.
This briefing note is prepared for guidance only and is not a legally binding interpretation of the Act.