Own Fund Schemes
Scope
A “regulatory own funds scheme” means a relevant scheme where the relevant scheme and not any sponsoring undertaking (employer) to whom it relates –
- underwrites any liability to cover against biometric risks,
- guarantees a given investment performance, or
- guarantees a given level of benefits;
A “regulatory own funds trust RAC” has the same meaning.
A “regulatory own funds requirement” requires the scheme to hold sufficient additional resources to at least satisfy that requirement;
A “regulatory own funds trust RAC technical provisions certificate” means a certificate prepared by an actuary certifying if, in the opinion of the actuary, the resources of the regulatory own funds trust RAC at the effective date of the certificate would have been sufficient to satisfy the technical provisions requirement, if the regulatory own funds trust RAC had been wound up on that date;
“Technical provisions” means –
- in relation to a regulatory own funds scheme on any date the regulatory own funds scheme’s funding standard liabilities,
- in relation to a regulatory own funds trust RAC on any date, were the regulatory own funds trust RAC to be wound up on that date, the sum of the value of the liabilities of the regulatory own funds trust RAC to provide benefits in accordance with the rules of the trust RAC and the estimated expenses of administering the winding up of the trust RAC calculated in accordance with any applicable guidance specified in regulations;
“The technical provisions requirement” means in relation to a regulatory own funds trust RAC, the requirement to hold resources to provide for the technical provisions, and references in this Part to “satisfying” the technical provisions requirement mean that the regulatory own funds trust RAC holds sufficient resources to at least satisfy that requirement;
Application & Exceptions
The legislation applies to a regulatory own funds scheme and a regulatory own funds trust RAC other than –
- a scheme which the Minister has by regulations made
- a scheme which is a statutory scheme to which section 776 of the Taxes Consolidation Act 1997 applies and where benefits are paid in whole or in part out of moneys provided from the Central Fund or moneys provided by the Oireachtas and the rules of which provide that an appeal may be made to a Minister of the Government,
- a scheme or trust RAC the winding up of which has commenced,
- a scheme or trust RAC the only benefits under which are payable in respect of the death of a member where those benefits are fully secured under a policy or policies of assurance with one or more than one undertaking.
The provisions apply only on and from the expiry of 5 years from the date of the coming into operation of the IORPs Regulations 2021 in relation to a one-member arrangement.
Technical Provisions Certificate.
The trustees of a regulatory own funds trust RAC are to cause the technical provisions and the technical provisions requirement for a regulatory own funds trust RAC to be calculated by an actuary and a regulatory own funds trust RAC technical provisions certificate to be prepared and submitted to the Authority annually
Requirement to hold Additional Resources.
A regulatory own funds scheme and a regulatory own funds trust RAC shall hold on a permanent basis—
- sufficient resources to satisfy the technical provisions of the regulatory own funds scheme or the technical provisions requirement of the regulatory own funds trust RAC, as appropriate, and
- additional resources over and above the above resources to serve as a safety capital to absorb any discrepancies between the anticipated and actual expenses and profits of the regulatory own funds scheme or the regulatory own funds trust RAC.
The additional resources required shall be the amount of the regulatory own funds requirement referred to , free of all foreseeable liabilities.
The trustees of a regulatory own funds scheme or regulatory own funds trust RAC shall take all reasonable steps to ensure that the regulatory own funds scheme or regulatory own funds trust RAC complies with the requirements of this section.
Amount of Regulatory own Funds Requirement.
The amount of the regulatory own funds requirement is the aggregate of –
- a percentage which shall be prescribed and which shall be not less than 4 per cent of the technical provisions of the regulatory own funds scheme or the regulatory own funds trust RAC; and
- a percentage which shall be prescribed and which shall be not less than 0.3 per cent of the capital at risk for the members of, or other persons entitled to benefits under, the regulatory own funds scheme or regulatory own funds trust RAC in respect of which the capital at risk is not a negative figure and where the capital at risk is as calculated.
Capital at risk means –
- to the extent that the benefit payable on death or disability of a member or other person entitled to benefits under the regulatory own funds scheme or regulatory own funds trust RAC comprises a lump sum benefit, the amount of that lump sum benefit on death or disability, and
- to the extent that the benefit payable on death or disability of a member or other person entitled to benefits under the regulatory own funds scheme or regulatory own funds trust RAC comprises the purchase of an annuity, the payment of a sum by instalments or any other kind of periodical payments, the current value of that benefit calculated in a manner which is consistent with the determination of the regulatory own funds scheme’s or regulatory own funds trust RAC’s technical provisions,
- less the regulatory own funds scheme’s or regulatory own funds trust RAC’s technical provisions in relation to those persons.
The Minister may prescribe that the percentage shall be increased to such greater percentage not exceeding 50 per cent, as he or she may decide of the technical provisions of the regulatory own funds scheme or the regulatory own funds trust RAC if and to the extent that the resources of the regulatory own funds scheme or the regulatory own funds trust RAC are invested in assets other than –
- Government securities known as bonds,
- securities issued under the laws of a Member State (other than the State) that correspond to those securities or
- cash deposits with one or more credit institutions.
The proportion of the technical provisions of the regulatory own funds scheme or the regulatory own funds trust RAC to which such increased percentage shall be applied shall be calculated in accordance with the formula –
A x B/C where –
- A is the amount of the technical provisions of the regulatory own funds scheme or the regulatory own funds trust RAC,
- B is the amount of the resources of the regulatory own funds scheme or the regulatory own funds trust RAC invested in assets other than those referred to above, and
- C is the amount of the resources of the regulatory own funds scheme or the regulatory own funds trust RAC.
In respect of any calculation to be made for these purposes , the resources of a regulatory own funds scheme or a regulatory own funds trust RAC shall exclude investments in excess of such a percentage as may be prescribed by the Minister, within such a class or description of investments as may be prescribed by the Minister.
Certification of Regulatory own Funds Requirement.
The trustees of a regulatory own funds scheme or regulatory own funds trust RAC shall, from time to time cause a a “regulatory own funds certificate”, to be prepared by an actuary who shall certify therein that as at the regulatory own funds certification date –
- the regulatory own funds scheme or regulatory own funds trust RAC satisfies the regulatory own funds requirement, or
- the regulatory own funds scheme or regulatory own funds trust RAC does not satisfy the regulatory own funds requirement.
The regulatory own funds certification date for a relevant scheme which is a regulatory own funds scheme shall be the same as the effective date of the actuarial funding certificate prepared for the regulatory own funds scheme.
The trustees of a regulatory own funds scheme and a regulatory own funds trust RAC shall submit the regulatory own funds certificate to the Authority within 3 months of the regulatory own funds certification date.
The Minister may by regulations prescribe the form and content of a regulatory own funds certificate. The Minister may by regulations require an actuary when completing a regulatory own funds certificate, to comply with the applicable professional guidance issued by the Society of Actuaries in Ireland and specified in the regulations or with any other guidance prescribed by the Minister.
The trustees of a scheme or trust RAC which becomes a regulatory own funds scheme or a regulatory own funds trust RAC shall so notify the Authority on or before the regulatory own funds notification date.
Submission of Certs
Where the trustees of a regulatory own funds scheme
- submit an actuarial funding certificate which certifies that at the effective date of the certificate the regulatory own funds scheme does not satisfy the funding standard, or
- the trustees of a regulatory own funds trust RAC submit a regulatory own funds trust RAC technical provisions certificate which certifies that at the effective date of the certificate the regulatory own funds trust RAC does not satisfy the technical provisions requirement,
- the trustees of a regulatory own funds scheme or regulatory own funds trust RAC submit a regulatory own funds certificate which certifies that at the regulatory own funds certification date the regulatory own funds scheme or regulatory own funds trust RAC does not satisfy the regulatory own funds requirement,
they shall submit to the Authority a regulatory own funds proposal.
Regulatory Own Funds Proposal
A regulatory own funds proposal shall contain a proposal designed to ensure the regulatory own funds scheme or regulatory own funds trust RAC satisfies the funding standard within 2 years of the effective date of the actuarial funding certificate. The regulatory own funds proposal shall be submitted to the Authority by the trustees within 4 months of the regulatory own funds certification date applicable
If the Authority is satisfied that a regulatory own funds proposal submitted is likely to enable the regulatory own funds scheme or regulatory own funds trust RAC to satisfy the funding standard, or the technical provisions requirement,(as applies) and where applicable the regulatory own funds requirement, within 2 years of the regulatory own funds certification date applicable to the certificate , it shall approve the regulatory own funds proposal or, if it is not so satisfied, it shall reject the regulatory own funds proposal.
Where the trustees of a regulatory own funds scheme or a regulatory own funds trust RAC –
- do not submit a regulatory own funds certificate within 3 months of the regulatory own funds certification date,
- do not submit a regulatory own funds proposal
- do not submit a regulatory own funds proposal within the period referred toe
- submit a regulatory own funds proposal which is rejected by the Board, or
- submit a regulatory own funds proposal which is approved by the Authority but the regulatory own funds scheme or the regulatory own funds trust RAC does not, within 2 years of the regulatory own funds certification date applicable to the certificat, satisfy the funding standard or the technical provisions requirement (as applicable) and the regulatory own funds requirement,
the Authority may by notice in writing direct the trustees as follows.
Direction
Where the last part applies and notwithstanding anything contained in the rules of the regulatory own funds scheme or the regulatory own funds trust RAC the Authority may direct the trustees –
- to wind-up the regulatory own funds scheme or the regulatory own funds trust RAC with effect from such date and subject to such conditions as the Authority may consider appropriate, and
- to take, by such date as the Authority may specify, such one or more of the measures specified below as the Authority considers appropriate in the circumstances, either indefinitely or for a specified period.
The following measures may be directed
- to cease or modify future accrual of benefits,
- to cease to accept further contributions from or in respect of members,
- to refrain from making investments of a specified class,
- to maintain funds, or effect insurance of a value, equal to the whole or a specified portion of the regulatory own funds scheme’s liabilities.
Where the trustees fail to take the measure or measures specified by the Board by such date as the Authority has specified, the Authority may direct the trustees to wind-up the regulatory own funds scheme or the regulatory own funds trust RAC with effect from such date and subject to such conditions as the Authority may consider appropriate.
An appeal to the High Court on a point of law from a direction of the Authority under subsection (6) or (8) may be brought by the trustees of the regulatory own funds scheme or the regulatory own funds trust RAC within 21 days of the date of the direction of the Board.
Supervisory Regulatory own Funds Certificate.
The Board, whenever it considers appropriate, may by notice in writing to the trustees of a regulatory own funds scheme or a regulatory own funds trust RAC, require the trustees to submit to the Authority within the period specified in the notice an actuarial funding certificate or a regulatory own funds trust RAC technical provisions certificate, and a regulatory own funds certificate having –
- in the case of an actuarial funding certificate or a regulatory own funds trust RAC technical provisions certificate such an effective date as is specified in the notice, and
- in the case of a regulatory own funds certificate, such a regulatory own funds certification date as is specified in the notice.
De facto regulatory own funds scheme
If at any time it appears to the Authority that a scheme or trust RAC is a scheme or trust RAC to which this Part applies but that the trustees of the scheme or the trust RAC have not made the notification required to be made under , the Authority may by notice in writing to the trustees of the scheme or the trust RAC determine that the scheme or trust RAC is a regulatory own funds scheme or a regulatory own funds trust RAC with effect from the date specified in the notice.
Where the Authority determines that a scheme or a trust RAC is a regulatory own funds scheme or a regulatory own funds trust RAC and gives written notice of such determination to the trustees of the regulatory own funds scheme or the regulatory own funds trust RAC , the regulatory own funds notification date for that scheme or trust RAC shall be the date falling 4 weeks after the date specified in the notice .
An appeal to the High Court on a point of law from a determination of the Authority may be brought by the trustees of the regulatory own funds scheme or the regulatory own funds trust RAC within 21 days after the date of determination of the Board.