Pension trustees must comply with new regime
LAST week saw the passing of new legislation which will have a major impact on trustees of pension schemes.
By the end of next January all pension trustees will be required to have undergone trustee training and newly appointed trustees must receive training within six months of their appointment to comply with new regulatory requirements.
The trustee training deadline applies equally to trustees of large pension schemes with hundreds of members as well as individual pension schemes that happen to be written under trust.
The Pensions Board has specified that every trustee must undertake trustee training in accordance with section 59AA which includes individual trustees, member trustees, all company directors acting as corporate trustees, pensioner trustees and professional trustees alike.
Employers are also under the supervision of the Pensions Board in this regard, and any employer who operates a scheme is obliged to arrange for the trustees of that scheme (and, in the case of a trustee which is a body corporate, for all the directors of that body corporate) to receive appropriate training. Where an employer breaches their obligation to provide appropriate training, they may be prosecuted.
All trustees have a duty to ensure that they are properly informed, particularly on legal issues and policy developments that may affect their responsibilities. This duty extends to holders of Small Self-Administered Pension ('one-man') Schemes.
However, the Pensions Board has given an exemption to one-man schemes from the 'formal' training process that applies to corporate pensioner trustees.
Instead, the trustee of a one-man scheme has to self-declare that they have read (and completed) a Trustee Training Handbook as approved by the Association of Pensioner Trustees of Ireland (APTI).
Within the Trustee Training handbook are guidelines on the essential requirements of Trusteeship.
There is no benefit to not complying with the simplified training process, and it has been IFG's experience that all trustees of a one-man scheme, when presented with the training handbook, will comply within the prescribed guidelines.
It is thought, however, that thousands of corporate trustees will not have completed the training by the deadline date.
A recent trustee survey conducted by IFG Corporate Pensions among pension professionals found that almost 20pc of respondents were unaware of the legislative changes on trustee training.
If trustees are found to be non-compliant with the new regulations, in force since February 1, they could face up to a €2,000 on-the-spot fine or their employer could face prosecution.
Trustees have a statutory duty to know and understand the law on pensions and trusts, the funding of schemes, and the principles of investing scheme assets.
The strain of legislative changes on pensions coupled with other pension issues is taking its toll on trustees. With the increasing pressure, many have found it difficult to balance their general work role with the additional responsibilities of being a pension trustee.
Outsourcing the trustee function is becoming more popular on a corporate level as it helps manage potential conflicts of interest that occur between trustees and companies, and is often more time-efficient and cost-effective.
Fionán O'Sullivan is a director of IFG Corporate Pensions