Dail Drawdown

To recap, the following specific recommendations are set out in the report:

1. Continue to monitor the implementation of the 2012 Consumer Code (Central Bank) and take specific actions to:

a. Examine the practice of re-brokering to ensure that it is always in the best interests of the consumer; and

b. Conduct an exercise to ensure compliance with the recently introduced requirement for Annual Statements.

2. Develop approaches to improve consumer, employer and trustee awareness and knowledge of pension charges.  This should ensure that information is clear and concise.  It should be standardised, where possible, and based on best practice (several organisations have a remit here).

3. Develop a communications action plan on pension charges (several organisations have a remit here).

4. Improve trustees’ knowledge and awareness of pension charges (Pensions Board).  Take specific actions to:

a. Develop a separate module on pension charges in trustee training;

b. Provide a support service to trustees setting out principles and best practice.

5. Review occupational pension disclosure regulations specifically to:

a. Provide for the issue of an Annual Statement to all deferred members (Department of Social Protection, Pensions Board);

b. Improve the information provided in the Statement of Reasonable Projection and the need for focussed detail should be reviewed (Department of Social Protection, Pensions Board).

6. Monitor developments and continue efforts to develop a single standard measure that would assess all costs and charges and thereby enable easier comparisons to be made (Department of Social Protection, Central Bank, Pensions Board).

7. Conduct further research on the drivers behind consumer choice of individual pension products – with particular reference to PRSAs.

8. Ensure data on charges is collected on a periodic basis - 3 yearly intervals is considered appropriate - to allow for continued scrutiny and future decision-making. (Central Bank, Pensions Board).

9. Evaluate the impact of this report, these recommendations and future EU developments after two years and assess if further and more stringent recommendations are required (Department of Social Protection, Central Bank, Pensions Board).

Source: www.welfare.ie

Ignoring the Elephant in the Room

The Social welfare and Pensions (Miscellaneous Provisions) Bill 2013 was announced by the Minister for Social Protection, Joan Burton TD on 22^nd May 2013.  The main pension provisions of the Bill were:

§  The Pensions Board will change its name to Pensions Authority and its governance is to change.  The Pensions Authority will consist of an independent chairperson appointed by the Minister for Social Protection and 2 ordinary members, one nominated by the Minister for Social Protection and a representative of the Minister for Finance.

 

§  A new Pensions Council will be established.  The Pensions Council will have a purely advisory function.  The Pensions Council will consist of: 

v  A chairperson;

v  A representative of the Minister for Social Protection;

v  The Pensions Regulator;

v  A representative of the Central Bank;

v  A representative of the Department for Public Expenditure and reform; and

v  Up to 8 other members who the Minister for Social Protection considers to have the relevant skills, specialist knowledge, experience or expertise to enable them to carry out their functions under the Pensions Act.

§  The name of the chief executive of the Pensions Board will be changed to the Pensions Regulator and s/he will be a member of the Pensions Council.

§  The Pensions Board will be given the power to wind up a pension scheme where the scheme is underfunded and the trustees and employer are not in a position to adopt a funding proposal, and where the trustees of the scheme fail to comply with a section 50 direction to restructure scheme benefits.

§  The introduction of a provision for an appeal to the High Court on a point of law following such a direction from the Pensions Board, or following a direction from the Pensions Board regarding a Section 50 order to reduce benefits “made other than on application by the trustees”.

While the above changes to the governance and oversight of pensions are largely welcomed, what is disappointing is that the Bill does not include the much promised proposed reform to the priority order rule, i.e. the order in which assets are distributed when a defined benefit pension scheme is in wind-up.  With a deadline of 30 June 2013 for the submission of funding proposals, for many schemes the decision not to address this issue in this Bill would seem to be a missed opportunity to reinstate some fairness between members of defined benefit schemes.   

The reason given by the Minister for not dealing with this issue is the recent Waterford Crystal case in which the EU ruled that the Irish government had failed to implement the EU Directive requiring governments to provide protection for scheme members where the employer was insolvent.  While it is of some relevance, the feeling is that this is just an excuse for the Minister failing to grasp the nettle of pension reform.

 

Written by Niamh Quirke

Independent Trustee Limited

Dáil Drawdown

Dáil Drawdown is a new edition to our blog and brings you recent pension news straight from the Dáil Chamber. Here is our first installment.

Source: www.oireachtas.ie