Pensions Law Update: Irish Pensions Authority Reflects on 2016 and Plans for the Future
29 May 2017
The Pensions Authority has issued a summary of its 2016 regulatory activity and its plans for 2017. We examine the Authority’s plans to increase direct engagement with regulated entities and to broaden its review of scheme governance and administration matters.
Supervision and compliance
In its summary of 2016 regulatory activity and plans for 2017 (the “Report”), the Pensions Authority (the “Authority”) identifies misappropriation of pension assets and the obligations on regulated entities to submit accurate and complete data as primary concerns. In line with this focus, the Authority has dedicated additional resources and increased its capacity for analysis and interrogation of submitted data.
These additional resources will ensure that the Authority is better placed to fulfil its supervisory and compliance role. Registered Administrators (“RAs”) received close attention in 2016. The Authority carried out a series of compliance meetings as well as 11 on-site inspections of RAs. These were intended to assist RAs to improve the quality of their data which has previously been a concern of the Authority and will remain a focus in 2017.
The Authority intends to further engage directly with trustees of both defined benefit (DB) and defined contribution (DC) schemes in 2017. During 2016, it secured 23 prosecutions and 12 convictions for breaches of legislative obligations. This resulted in fines totalling €20,850 being imposed by the courts.
The prosecutions predominately concerned cases relating to the deduction and non-payment of employee pensions contributions to schemes, and failure to respond to a request for information from the Authority.
The Report restates the Authority’s intention to remain proactive in ensuring compliance with further on-site inspections, reviews of reports and audits on compliance desks.
Guidance and reform
The Authority issued 11 Codes of Governance which set out the standards expected of trustees of DC schemes. Two further guidance notes were also published to support trustees of DB schemes in planning their investment strategy. The guidance notes also assisted DB schemes in preparing the Statement of Investment Policy. The Authority expects that these codes will increasingly be used by trustees in 2017.
Last year, the Authority held a public consultation process over its reform proposals on ‘Governance and Simplification of Supplementary Pensions’. It submitted a draft report with recommendations for reform which had the following objectives:
- all schemes should be actively managed to a high standard;
- the Authority should be able to oversee the running of schemes to the necessary detail and intervene where beneficiary interests are at risk;
- savers should find it easier to understand the pensions system and be supported to make the necessary decisions; and
- a reduction in the number of schemes in Ireland from 160,000 to a medium-term target of 100-150 active schemes, to facilitate effective oversight.
The Report sets out the Authority’s intention to assist the Department of Social Protection (the “Department”) in transposing the EU directive on institutions for occupational retirement provision (IORP II). The Authority will also conduct a review on behalf of the Department on the feasibility of changing the minimum funding standard and establishing a pension protection scheme.
The Authority plans to continue to assist the pensions sector participants to prepare and adapt to the impending pension reforms. It will also continue to promote the information and enquiry services it provides.
What to expect from the Authority in 2017?
The Authority will continue to monitor and advance compliance. It has allocated additional resources in particular for the area of data analysis. As a result data submission by RAs and trustees will be under increased scrutiny.
Further guidance will be prepared by the Authority for trustees and RAs. Scheme administrators should afford particular attention to this guidance where they cover the areas of reform.
The pensions sector will see increased degree of supervision and engagement on compliance during the remainder of 2017.
For more information on impending reforms in the sector and how they may affect your business, please contact a member of our Pensions team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.