Trust based Retirement Annuity Contracts: Consultation process
Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003, on the activities and supervision of institutions for occupational retirement provision (“the IORPs Directive”), imposes regulatory requirements on schemes and it would appear these requirements apply to trust based RACs. In order to comply with the IORPs Directive and for other policy reasons consideration is being given to bringing trust based RACs within the ambit of the Pensions Acts.
Briefly, if this were to happen, it is likely that the following parts of the Pensions Acts would apply to trust based RACs subject to any amendment required, to take account of the fact that the members of such schemes are self employed:
Part I – Preliminary and General – This part includes the interpretation provisions of the Act and gives the Board power to prosecute breaches of the Act;
Part II – Establishment of the Pensions Board – this relates to the establishment and governance of the Pensions Board;
Part III – Preservation of Benefits and minimum value of contributory retirement benefits;
Part IV – The funding standard provisions of the Act – these provisions will only apply to trust based RACs which are of a defined benefit nature or to those of a defined contribution nature which pay pensions directly from the fund;
Part V – Disclosure of Information in relation to the scheme – this requires inter alia the preparation of annual reports and benefit statements by the trustees;
Part VI – Trustees of Schemes – this Part imposes certain duties on trustees under the Act over and above the common law duties attaching to trusteeship;
Part VII – Equal treatment provisions – these already apply to trust based RACs;
Part VIII – Compulsory and voluntary reporting to the Board – these are otherwise known as whistle-blow provisions;
Part IX – Miscellaneous applications to the High Court – these relate to applications by the Board to the High Court to order the restoration of resources to a scheme or to require the disposal of an investment as well as giving the Board a power to seek injunctions in certain circumstances;
Part XI – Pensions Ombudsman – members will have access to the Pensions Ombudsman
Part XII – Cross-Border Schemes – these provisions allow schemes operating in Ireland to accept contributions from employers based abroad and schemes operating abroad to accept contributions from Irish employers on behalf of Irish members – in practice it is unlikely that these provisions will have any impact on the majority of trust based RACs.
We would be happy to receive any views or comments you may have in relation to this matter, in writing, prior to 29 May 2006. Comments can be directed to, Sylvia McNeece of The Pensions Board via e-mail at email@example.com