The recent arrival of the IORP II regulations in Ireland means that major pension changes are underway, and pension scheme Trustees and employers are now having to take steps to ensure their pension scheme is compliant.
The implications of the new legislation are significant for group pension schemes. If an employer wants to leave the scheme where it is, they will have to adapt the standalone pension scheme plan to comply with IORP II, which involves numerous reviews, policies, procedures and other deliverables.
Additional requirements to be met as a result of the legislation include:
- Enhanced pension scheme governance and internal controls;
- Strengthening schemes’ risk management systems, including a requirement for a formal risk management function;
- Requirement for schemes’ to carry out an internal audit and have an internal audit function;
- A much broader scope of member communications requirements, including provision of annual benefit statements to deferred members;
- New fitness and probity standards for trustees and other persons involved in running schemes;
- Extended powers for the Pensions Authority with respect to applying forward-looking, risk-based principles to the supervision of pension schemes and monitoring of compliance;
- Updated rules relating to the operation of cross border schemes and transfers between schemes in Ireland and the EU.
An alternative to existing arrangements for employers and trustees is to transfer the existing pension to a master trust arrangement. Several of the major pension providers have established masters trusts and are currently processing a high volume of scheme transfers.
In a master trust, multiple employers can participate in one pension scheme, operating under a single trust. Many companies are probably wondering if joining a master trust means forgoing any unique features they currently offer and committing to a more homogenous pension offering for their members.
One key thing to understand about master trusts is that there are still points of difference between the participating companies. Although multiple employers are essentially subscribing to the same plan, certain aspects are administered separately. So, a company joining a master trust plan today can still retain many of their current plan specifics, like contribution rate structures etc.
Essentially, participating companies can avail of economies of scale that go with being part of a larger entity, and importantly all the governance requirements to comply with IORP II are met centrally by the master trust and its trustees.
A solid communications plan is one of the key pillars of the IORP II regulations, so both standalone plans and master trusts will have a regulatory requirement to provide strong supports in this area.
The providers of master trusts will have to offer a broad programme of communications delivering to all members on an ongoing basis.
However, employers and trustees will need support in selecting an appropriate provider and subsequently managing the initial member communication process and advising members on aspects such as the benefits of the new arrangement and appropriate investment of their pension funds.
Harvest’s Role in Supporting Your Scheme requirements – Administration and Advice
As an employer or Trustee of your company pension scheme, you might not much have of a relationship with the advisor on the scheme itself, or any ongoing engagement other than receiving annual benefit statements.
Our Advisory team, assisted by Harvest Trustees Ltd, are subject matter experts and can help you prepare for IORPS II and manage your transfer into a Master Trust, if appropriate. We are already in the process of helping a number of schemes meet the new requirements
We’re here to help.
In this time of regulatory change, we are here to offer simple, straightforward advice to provide clarity as to your options.
Call Harvest on 01-2375500 or email firstname.lastname@example.org and we will be delighted to help.
This marketing information has been provided for discussion purposes only. It is not advice, it is provided for general information purposes only and does not fully take into account your financial position, investment needs and objectives, attitude to risk, liquidity needs, capital security needs, capacity for loss, etc. It should therefore not be relied upon to make investment decisions. Prior to any formal investments taking place you will be provided with a detailed suitability letter taking into account all the above and outlining why the investment(s) are (not) suitable for you.
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