Ireland: Pensions and The General Data Protection Regulation

The General Data Protection Regulation ("GDPR") is due to be implemented on 25 May 2018 and will replace the Data Protection Directive 1995 (the "Directive") which was transposed into Irish law by the Data Protection Acts 1988 and 2003 (the "Acts"). GDPR and the Data Protection Bill 2017 (the "Bill") (when enacted) will largely supersede the Acts.

GDPR will be legally binding in Ireland from its enforcement date (25 May 2018) and will not require implementing national legislation to be effective. The Bill (when enacted) will give further effect to GDPR and will clarify the provisions that give Member States a limited margin of flexibility. GDPR (like the Directive and the Acts) will govern the processing (i.e. handling, accessing, transferring etc.) of personal data.

Personal data includes member data held by pension scheme trustees. Processing of "Special Categories of Personal Data" ("SCPD") requires increased protection.

Trustees may process SCPD which requires separate consideration.

Trustees will have a number of actions to take in advance of the commencement of GDPR, a summary of which is set out below. If you would like further information in relation to these or if you would like trustee training on this topic, please contact your usual Arthur Cox pension team contact.

Common definitions under the current Acts and GDPR are set out at the end of this update.

WHAT DO TRUSTEES NEED TO DO?

DO

  1. Adopt a data breach response procedure to handle breaches within the new 72 hour timeframe
  2. Maintain an internal record of data processing activities in order to demonstrate "accountability"
  3. Review their data protection policy in light of GDPR requirements
  4. Update privacy notice/data protection statement to ensure data subjects are provided with transparency notice detailing how their personal data is processed
  5. Review procedures in light of data subjects' additional rights (e.g. the right to be forgotten and the right to data portability)
  6. Review contracts with scheme administrators and other data processors
  7. Notify members that the legal basis for processing their data is that it is lawful and necessary for the operation of the scheme
  8. Revisit scheme indemnity provisions to determine who would have to foot the bill for any breach of GDPR by the scheme

DON'T

  1. Register with the DPA: GDPR will abolish the requirement to register with the DPA

CONTINUING TRUSTEE OBLIGATIONS UNDER GDPR

While trustees may outsource activities involving the processing of member data to advisers and service providers (i.e. data processors), the trustees will remain ultimately responsible for compliance with GDPR. In the context of outsourcing, there will be little impact on existing restrictions on the transfer of data outside of the European Economic Area (the "EEA") which are a feature of many administration agreements. Trustees should consider this in the context of any agreements which allow for the flow of personal data outside the EEA.

Under GDPR, data controllers and data processors have separate and distinct obligations. Controllers have a larger compliance burden than processors under GDPR. An assessment of whether trustees would be considered controllers or processors under GDPR is a factual analysis of the processing of personal data by the trustees. Both corporate and individual trustees are likely to be data controllers under the Acts and under GDPR and, as such, are subject to certain obligations. While some data processing activities may be outsourced to third parties (including to service providers), trustees will remain responsible for compliance with the GDPR as data controller of member data and will continue to be obliged to do the following in respect of personal data:

  • obtain and process it fairly;
  • keep it for one or more specified, explicit and lawful purposes;
  • use and disclose it solely in a manner compatible with such purposes;
  • keep it safe and secure;
  • keep it accurate, up to date and complete;
  • ensure it is adequate, relevant and not excessive;
  • retain it for no longer than necessary; and
  • give a copy to the data subject on request.

How trustees comply with their obligations should be proportionate to the size, nature and complexity of their scheme, bearing in mind their duty of care to act in members' interests and the risk to its members in the event of non-compliance or a security breach.

PRINCIPAL CHANGES UNDER GDPR

The principal changes that arise under GDPR are:

  • Supervisory Authority: Each Member State will have to establish a Supervisory Authority ("SA") and most countries will likely transition their Data Protection Authority ("DPA") to be the SA. The SA's functions will be similar to those currently performed by the DPA and will include investigation and enforcement of GDPR and liaising with other Member State SAs. Data controllers and data processors will be subject to a "lead" SA instead of interacting with several SAs in respect of each relevant Member State. A data subject may complain directly to an SA.
  • Internal Records: trustees will be obliged to maintain internal records of data processing activities. An internal record of data processing activities must outline why data is held, how it was obtained, why it was obtained, how long it should be retained for, how secure it is and how it is shared. This is required to comply with GDPR's "accountability" provisions.
  • Registration: GDPR will abolish the requirement to register with the DPA.
  • Privacy Notice/Data Protection Statement: Under the Acts, there was a requirement to notify data subjects in relation to the processing of their personal data. GDPR increases the amount of information to be notified to data subjects.
  • Data Subject Consent: In order to process data, trustees must have an appropriate legal basis, e.g. the data subject's consent. To demonstrate a data subject's consent, data controllers will no longer be permitted to rely on pro-forma terms and conditions unless consent is "clearly distinguishable" from other matters and is "in an intelligible and easily accessible form, using clear and plain language". Data subjects have the right to withdraw consent at any time.
  • Strengthening data subjects' rights: GDPR introduces new and enhanced data subject rights which data controllers must facilitate including the right to be forgotten and right to data portability. Trustees will have to put in place mechanisms to respond to the exercise of these rights within the statutory timeframe of one month although their application appears limited given the purpose of a pension scheme.
  • Breach notifications: GDPR introduces an obligation to report all breaches to the SA within 72 hours, unless the breach is unlikely to result in a risk to data subjects' personal data. In certain circumstances there is also an obligation to report a breach to affected data subjects. Trustees should analyse information security measures to ensure a robust security system is in place. Both the breach, and failure to report the breach, may result in a fine.
  • Data processors responsible for breach: for the first time data processors will be liable for breaches to data protection.
  • Enforcement and Penalties: there will be a harmonised sanctions regime under GDPR. In particular, the GDPR grants the Office of the Data Protection Commissioner the ability to impose extensive financial and non-financial sanctions on data controllers and data processors. These sanctions may include fines of up to €20 million or 4% of annual worldwide turnover depending on the severity of the breach. It is likely that liability will attach to individual trustees and if a corporate trustee, the trustee company (rather than directors) would be liable. Trustees may be protected by the indemnity provisions in their trust deed and rules and these should be considered in the context of the increased sanctions regime.

CONSIDERATIONS FOR TRUSTEES IN LIGHT OF GDPR

  • Is member consent necessary to process personal data, or is there a more appropriate basis upon which personal data may be processed? Trustees may wish to consider using an alternative ground for processing such as that it is lawful and necessary for the operation of the relevant scheme.
  • Are trustees obliged to engage a data protection officer? A data controller/ processor is obliged to engage a DPO if their core activities consist of processing operations which, by virtue of their nature, their scope and/ or their purposes, require regular and systematic monitoring of data subjects on a large scale. The majority of trustees will not fall into this category and so will not be legally required to appoint a DPO.
  • Is it possible that parent company turnover be included in the calculation of worldwide turnover for the purposes of sanctions? Whether the worldwide turnover of a principal employer could be used for the purposes of calculating a fine imposed on pension scheme trustees will turn on the specific facts of a particular case and is likely to focus on the corporate relationship between the parties and the extent to which the principal employer exercises control over the trustee board (whether the trustee is incorporated or not).

DEFINITIONS UNDER GDPR/THE ACTS:

Data controller means a person who alone or jointly with others, determines the purposes and means of processing of personal data.

Data processor means any person (excluding a data controller's employee) who processes personal data on behalf of the data controller.

Data subject means a person identifiable by personal data held by a data controller.

Personal data means data which relates to a person who may be identified (directly or indirectly) from that data.

Processing means collection, recording, organisation, structuring, storage, adaptation, or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction of personal data.

Special Categories of Personal Data means personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, or trade union membership, and the processing of genetic data, biometric data for the purpose of uniquely identifying a natural person, data concerning health or data concerning a natural person's sex life or sexual orientation.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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