The Minister for Social Protection signed a wide range of new pension regulations late last year that either amend older regulations or revoke and replace existing investment-related regulations. The changes for Trust Retirement Annuity Contracts (Trust RACs) were implemented by way of two new statutory instruments:
- Trust RACs (Investment) Regulations 2021 (New Investment Regulations), and
- Trust RACs (Disclosure of Information) (Amendment) Regulations (New Disclosure Regulations)
The New Investment Regulations
Existing Trust RAC investment regulations have been revoked in full and replaced with the New Investment Regulations. The changes reflect the new investment rules set out in the Pensions Act 1990, as amended (Act) such as a requirement that all Trust RACs must now invest predominantly in regulated markets and adhere to borrowing restrictions. Trustees may only borrow for short term liquidity purposes.
The Statement of Investment Policy Principles (Policy) in the Act is also replicated with the added requirement to include information on how the Policy takes environmental, social and governance factors into account.
The New Disclosure Regulations
The existing Trust RAC disclosure of information regulations are amended by the New Disclosure Regulations. The main changes introduced include:
- The Annual Benefit Statement and Statement of Reasonable Projection: These will no longer be required once a Trust RAC makes its first Pension Benefit Statement (PBS) available to members in accordance with the Act. All Trust RACs must make their first PBS available to members by 31 December 2022.
- A number of new disclosure obligations including how and when information is to be provided, and to whom.
- Revised signing requirements for audited accounts, to reflect the new two-trustee rule under the Act, and
- A requirement for audited accounts to include the disclosure of any significant investment holdings by the Trust RAC.
The regulatory amendments were always in the pipeline after the transposition of the IORP II Directive in April 2021. However, most of the new regulations were signed into law by the Minister in the run up to the holidays and so many trustees will still be playing catch-up. Legal advice should be sought where there is any uncertainty on the new regulatory requirements for Trust RACs.
For more information, contact a member of our Employment & Benefits team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.