Tuesday 16 January 2018

Trustees called in by regulator for face-to-face pensions probe

Jerry Moriarty, Director of Policy, Irish Association of Pension Funds (IAPF)
Jerry Moriarty, Director of Policy, Irish Association of Pension Funds (IAPF)
Charlie Weston

Charlie Weston

TRUSTEES of company pension plans are being called in by the regulator to be quizzed to ensure they are up to the job of overseeing their schemes.

The trustees of defined benefit schemes are being questioned by the Pensions Authority without their financial or legal advisers being present.

There are around 500 active defined benefit schemes still in operation, with assets totalling €65bn.

These schemes account for around 210,000 workers and pensioners, according to Jerry Moriarty, inset, of the Irish Association of Pension Funds (IAPF), which represents trustees. A defined benefit pension in private sector is a promise to pay a set level of pension based on an employee's earnings history and length of service.

For those with 40 years' service, the promise has been to pay a pension amounting to two-thirds of the salary at retirement.

However, large numbers of DB schemes are in deficit, with the majority of these currently being restructured. Known as a Section 50, this generally involves reducing the pension benefits and increasing the contributions.

A spokesman for the regulator, the Pensions Authority, confirmed that it recently began a process that will eventually see trustees of all schemes interviewed by its regulatory staff.

Each trustee is questioned as part of the process.

This is likely to involve some 3,500 trustees in total.

He confirmed that scheme advisers are excluded from these meetings, and all trustees of each scheme have to attend.

The objective of the trustee engagement was to gauge the level of competence of trustees.

"We have started a process of direct engagement with trustees of all schemes.

"We want to ensure trustees are in a position to question their advisers, and are able to tease out with the advisers the strategies and plans being pursed for the scheme."

The Pensions Authority spokesman said the trustee questioning started the end of last year with larger schemes, and would continue until each scheme is covered. Mr Moriarty, of the IAPF, said trustees already interviewed had reported that the questioning was thorough but fair, with a lot of preparation required by trustees, and documentation asked for by the regulator.

"The Pensions Authority is seeking some level of comfort that trustees are aware of the issues and understand the advice they are getting," he said.

It is understood that the Pensions Authority will take an intrusive regulatory approach to schemes where there are concerns about the competence of the trustees, based on the answers to the questioning from the regulators.

The trustee engagement comes as the Pension Authority is expected to drop a proposal to require all trustees to have a professional pension qualification to act as a trustee, a move that would rule out most worker trustees.

The Irish Congress of Trade Unions has criticised the proposal, an intervention that puts huge pressure on new Pensions Authority chairman and former general secretary of Congress David Begg to order the scrapping of the idea.

Irish Independent

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