The Pensions Authority is a regulatory body in Ireland. One of its functions is to issue guidance on the duties and responsibilities of pension scheme trustees. It intends to issue several codes of governance during 2016. This article provides a brief outline of the first two published tranches.
The Pensions Authority in Ireland (the "Authority") recently published the second tranche of its DC Codes of Governance for Defined Contribution ("DC") schemes. The Authority has now published six DC Codes in total. Many trustee boards may already have governance frameworks in place. However, they would be well advised to at least undertake an audit of their current position against what is provided by the Authority as reference action plans within these new codes. This could identify any gaps which might require further action.
The Authority highlights that pension scheme governance means trustees managing and overseeing proper:
- Compliance with regulatory requirements;
- Investment of the scheme's assets;
- Collection of contributions;
- Payment of benefits;
- Record keeping; and
- Communication of information to members.
The DC Codes of Governance address the following issues:
DC Code 1: Governance plan of action
DC Code 2: Trustee meetings
DC Code 3: Managing conflicts of interest
DC Code 4: Collection and remittance of contributions
DC Code 5: Investing scheme assets
DC Code 6: Paying benefits
Copies of these codes can be downloaded free of charge from the Authority's website. They are intended to supplement and should be read in conjunction with another Authority publication, the Trustee Handbook. They are not a statement of law but "set out the standards of behaviour that the Authority would expect trustees to adopt to demonstrate their commitment to service the best interests of members, deferred members, and other beneficiaries."
The Authority notes that a governance framework is an essential reference point but must be translated into an action plan and to do this trustees must know:
- Their scheme, including a good working knowledge of the relevant scheme documents.
- The financial, legal and regulatory environment in which they operate. This includes knowing the law, undertaking trustee training and being familiar with the Trustee Handbook and the codes of governance.
- Their stakeholders, i.e. the beneficiaries and sponsoring employers, regulatory authorities and advisers.
In short, trustees may need both general and more bespoke training to ensure they meet this suggested standard. These codes set out quite detailed action plans which trustees should access from the Authority's website and consider for use as an audit tool against their own current arrangements and decide how they need to respond.
The first two tranches of DC Codes provide a reference point to facilitate trustees in reviewing and assessing governance of their DC schemes to the extent that they have not already done so. Given that the Authority has indicated its intention to publish several codes of governance during the course of 2016, Trustees should now consider what action they may need to take to ensure that they have a plan to manage their response to, and are not overwhelmed by, any further necessary work that may emanate from additional codes throughout the year.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.