Scheme Governance

Governance Systems

The trustees of a scheme or trust RAC shall put in place an effective system of governance which provides for sound and prudent management of the activities of that scheme or trust RAC. They must provide an effective system for ensuring the transmission of information.

They must provide that such system of governance includes an adequate and transparent organisational structure with a clear allocation and appropriate segregation of responsibilities. It must  set out the functions and activities required to manage the scheme or trust RAC. The trustees must specify the person who is responsible for performing each such function and carrying out any such activity The system of governance shall include consideration of environmental, social and governance factors related to investment assets in investment decisions.

The trustees shall regularly review the system of governance. They must  ensure that the system of governance referred  is proportionate to the size, nature, scale and complexity of the scheme or trust RAC concerned.

Written Policies

The trustees of a scheme or trust RAC must  establish, and apply, written policies in relation to –

• risk management,
• internal audit, and
• where relevant, actuarial and outsourced activities.

The trustees shall approve the above written policies before those policies are established and applied. They shall –

• review the policies referred to in that subsection at least once every 3 years, and
• adapt any of the policies where there is, or has been, any significant change in the system or area with which any of those policies is concerned including any change provided by, or under, any enactment.

Internal Control Systems

The trustees of a scheme or trust RAC shall put in place an effective internal control system which shall include –

• administrative procedures,
• accounting procedures,
• an internal control framework, and
• appropriate reporting arrangements at all levels of the scheme or trust RAC concerned.

The trustees of a scheme or trust RAC must take reasonable steps to ensure continuity and regularity in the performance of the scheme or trust RAC of its activities, including the development of contingency plans. For these purposes, the trustees shall employ appropriate and proportionate systems, resources and procedures.

Number of Trustees

A scheme or a trust RAC shall, have at least two persons appointed as trustees of the scheme or trust RAC who effectively run that scheme or trust RAC.

Where a company is appointed as the sole trustee of a scheme or trust RAC, the requirement to appoint at least 2 trustees who effectively run the scheme or trust RAC is  deemed to be satisfied where it has at least 2 directors who effectively run that scheme or trust RAC

(Where immediately before the coming into operation of the European Union (Occupational Pension Schemes) Regulations 2021 a scheme or trust RAC had less than 2 persons appointed as trustees of the scheme or trust RAC, another person or a qualifying company above must have been appointed as a trustee of that scheme or trust RAC not later than 31 December 2021

Key Function Holders

Requirements for fit and proper management: key function holder and persons to whom key function outsourced

‘key function holder’ means a  person carrying out

• a risk management function;
• an internal audit function;
• where applicable, an actuarial function.

The trustees of a scheme or trust RAC must  not appoint a person to carry out a key function in relation to the scheme or trust RAC unless they are satisfied that the person –

• is, having regard to the statutory criteria, of good repute and integrity,
• where the key function concerned is the actuarial key function, or the internal audit key function, possesses the professional qualifications, knowledge and experience that are adequate to properly carry out that key function, and
• for other key functions, possesses the qualifications, knowledge and experience that are adequate to properly carry out that key function.

Where a key function is to be outsourced, the trustees of the scheme or trust RAC shall not appoint a service provider referred to in that section to carry out an outsourced key function unless they are satisfied that the contract provider –

• is, of good repute and integrity, and
• where the key function to be outsourced is the actuarial key function, or the internal audit key function, possesses the professional qualifications, knowledge and experience that are adequate to properly carry out that key function when outsourced, and
• where the key function to be outsourced is a key function other than those last specified possesses the qualifications, knowledge and experience that are adequate to properly carry out that key function when outsourced.

The Pensions Authority may require, by notice in writing, information from the trustees as to whether any person –

• who carries out a key function, or
• to whom a key function is outsourced,

satisfies the above requirements. The trustees shall provide the information requested by the Pensions Authority

Fit and Proper

Requirements for fit and proper management: requirements in respect of good repute and integrity for appointment as trustee, key function holder; and for person to whom key function outsourced

For the purposes of satisfying the requirement of good repute and integrity  a person, or as the case may be, a company does not satisfy that requirement if –

• the person, or as the case may be, the body corporate or any director of that body corporate has been convicted of –an offence involving fraud or dishonesty, an offence of money laundering under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2018, or an offence in respect of conduct in a place other than the State that would constitute an offence of those kinds
• the person is an undischarged bankrupt, has made a composition or arrangement with his or her creditors and has not discharged his or her obligations under that composition or arrangement, is, or is deemed to be, the subject of restriction order or

in the case of a body corporate, the body corporate has commenced a voluntary winding-up, is subject to a winding-up order or is the subject of proceedings for such an order, or has proposed a compromise or arrangement with creditors, or in the case of a company  a director of that body corporate –

• is subject to a restriction order
• a disqualification in respect of conduct in a place other than the State that would constitute a disqualification order within the meaning of Chapter 4 of Part 14 of the Companies Act 2014 .

Where –

the Pensions Authority requires proof of good repute, proof of no previous bankruptcy, or both, in respect of a person who is a national of another Member State where such person, in respect of a scheme or trust RAC, acts, or proposes to act, as a trustee or carries out, or proposes to carry out, a key function, the Pensions Authority may, by notice in writing, request the trustees of the scheme or trust RAC to furnish it with any record or document following.

• an extract from the judicial record of the other Member State, or
• in the absence of a judicial record in the other Member State an equivalent record or document, issued by a competent judicial or administrative authority designated to issue such records or documents in the Member State of which the person is a national or in the State which demonstrate compliance with the required proofs.

Pensions Authority Proof of Repute

In the event that no equivalent document is issued by a competent judicial or administrative authority in the Member State of which the person is a national or the State, he or she may provide the Pensions Authority with –

• a declaration on oath made in accordance with the law of the other Member State, or
• a statutory declaration under the Statutory Declarations Act 1938 in the form prescribed,

stating that the requirements of good repute, no previous bankruptcy, or both, are satisfied by him or her.

Where the Pensions Authority makes a request, the trustees of the scheme or trust RAC shall present the record or document concerned, to the Pensions Authority within 3 months of the date of issuance, or date of making, of that record or document.

Remuneration Policy

The trustees of a scheme or trust RAC shall establish and apply a sound remuneration policy determined in accordance with the principles below for

• the trustees of the scheme or trust RAC,
• persons who carry out key functions,
• other categories of staff employed by the trustees of the scheme or trust RAC whose professional activities have a material impact on the risk profile of the scheme or trust RAC, and
• a service provider referred to whom a key function or other activity referred to in that section is outsourced

Trustees of a scheme or a trust RAC shall regularly disclose publicly relevant information regarding their remuneration policy.

The remuneration policy established and applied) shall:

• be established, implemented and maintained in line with the activities, risk profile, objectives, and the long-term interest, financial stability and performance of the scheme or trust RAC as a whole, and shall support the sound, prudent and effective management of the scheme or trust RAC;
• be in line with the long-term interests of members and beneficiaries of the scheme or trust RAC;
• include measures aimed at avoiding conflicts of interest;
• be consistent with sound and effective risk management and shall not encourage risk-taking which is inconsistent with the risk profiles and rules of the scheme or trust RAC concerned;
• apply to the scheme or trust RAC and to certain service providers
• establish and set out the general principles of the remuneration policy and provide that the trustees of the scheme or trust RAC shall review and update that policy at least once every 3 years;
• provide for clear, transparent and effective governance with regard to remuneration and the manner in which it is overseen.

The trustees shall,

• review and update the general principles of the remuneration policy within the period referred to in that paragraph, and
• implement the remuneration policy.

The trustees of a scheme or a trust RAC, when establishing and applying the remuneration policy shall establish and apply that policy in a manner that is proportionate to –

• the size and internal organisation of the scheme or trust RAC, and
• the size, nature, scale and complexity of the activities of the scheme or the trust RAC.

The trustees of a scheme or trust RAC shall establish and apply the remuneration policy for the scheme or trust RAC where a scheme or trust RAC is established immediately before the day on which the European Union (Occupational Pension Schemes) Regulations 2021 come into operation, not later than 31 December 2021.

Own-risk assessment

The trustees of a scheme or trust RAC shall carry out and document an own-risk assessment of the scheme or trust RAC. It is to be proportionate to –

• the size and internal organisation of the scheme or trust RAC concerned, and
• the size, nature, scale and complexity of the activities of the scheme or trust RAC concerned.

It shall be carried out at least once every 3 years, and without delay following any significant change in the risk profiles of the scheme or trust RAC.

The trustees of a scheme or trust RAC shall, when carrying out and documenting the own-risk assessment have regard to the size and internal organisation of the scheme or trust RAC concerned as well as to the size, nature, scale and complexity of its activities and include the following:

• a description of how own-risk assessment is integrated into the management process and into the decision-making processes of the scheme or trust RAC;
• an assessment of the effectiveness of the risk management system;
• a description of how the scheme or trust RAC prevents conflicts of interest with the employer, where the scheme or trust RAC outsources key functions to the employer
• an assessment of the overall funding needs of the scheme or trust RAC, including a description of the recovery plan where applicable;
• an assessment of the risks to members and beneficiaries relating to the paying out of their retirement benefits and the effectiveness of any remedial action considering, where applicable –(i) indexation mechanisms, and(ii) benefit reduction mechanisms, including the extent to which accrued pension benefits can be reduced, under which conditions and by whom;
• a qualitative assessment of the mechanisms protecting retirement benefits, including, as applicable, guarantees, covenants or any other type of financial support by the employer, insurance or reinsurance by an undertaking covered by Directive 2009/138/EC or coverage by a pension protection scheme, in favour of the scheme or trust RAC or the members and beneficiaries;
• a qualitative assessment of the operational risks;
• where environmental, social and governance factors are considered in investment decisions, an assessment of new or emerging risks, including risks related to climate change, use of resources and the environment, social risks and risks related to the depreciation of assets due to regulatory change.

The trustees of a scheme or trust RAC shall, have in place methods to identify and assess the risks –

• to which the scheme or trust RAC is, or could be, exposed to in the short term and the long term, and
• which may have an impact on the ability of that scheme or trust RAC to meet its obligations.

The trustees shall ensure that the methods are proportionate to the size, nature, scale and complexity of the risks inherent in the activities of the scheme, or a trust RAC concerned.

The trustees of a scheme or trust RAC shall consider an own-risk assessment carried out under this section in respect of the scheme or trust RAC concerned when making a strategic decision in respect of the scheme or trust RAC.

Compliance Statement

Not later than 31 January of each year, the trustees of a scheme or trust RAC shall prepare a statement in relation to compliance ( called  compliance statement’) for the immediately preceding year for the purposes of prudential supervision.The  compliance statement shall specify information relating to compliance with the the statutory requirements applicable to the activities of the trustees.

The form of the compliance statement shall be specified by the Pensions Authority following consultation with the Minister.

The trustees shall submit the compliance statement to the Pensions Authority not later than 1 month after that statement is prepared. The  trustees shall certify that the information provided in the compliance statement has been reviewed for accuracy and completeness and shall be certified by –

• at least 2 trustees of the scheme or trust RAC, or
• where a body corporate is appointed as the sole trustee of that scheme or trust RAC, at least 2 directors of that body corporate.

Where the Part compliance statement has been submitted to the Pensions Authority, the Pensions Authority may, by notice in writing, request the trustees of a scheme or trust RAC to furnish the Authority, within a period as is specified in the notice, with information and documentation in respect of any matter specified in the compliance statement.

Where the Pensions Authority has requested further information and documentation the trustees of the scheme or trust RAC concerned shall provide that information and documentation within the period specified in the notice).

Transitional provisions

Where a scheme or trust RAC is registered on or before the date of the coming into operation of the 2021 Regulations , the first compliance statement shall be prepared not later than 31 January 2022 in respect of 2021.

Where  a scheme or trust RAC is registered after the 2021 regulations commence the first compliance statement shall be prepared not later than 31 January immediately following the day on which the scheme or trust RAC is registered in respect of the period from the day on which the scheme or trust RAC is registered to 31 December immediately following that day.

Request by Pensions Authority

Where the trustees of a scheme or a trust RAC have entered into an arrangement the Pensions Authority may, by notice in writing, request –

• the trustees of the scheme or trust RAC concerned,
• the service provider concerned, and
• and a person who, on behalf of a service provider, performs, or carries out, any matter which is required to be performed or carried out pursuant to that arrangement,

to furnish it with any information, document or material relating to that arrangement within a period as the Pensions Authority may specify in the notice.

A person to whom a notice is given shall comply with the request set out in the notice.

Conflict between Regulations and scheme or trust RAC

The provisions of the Regulations  override any rule of a scheme or trust RAC to the extent that that rule conflicts with those provisions. Any question as to whether any provision of the IORPs Regulations conflicts with any rule of a scheme or trust RAC, is to  be determined by the Pensions Authority on application to it in writing. The following persons shall be entitled to make an application under this section in respect of a scheme or trust RAC –

in the case of a scheme –

• the trustees of the scheme,
• any member or prospective member of the scheme, and
• any employer of persons in relevant employment to which the scheme applies, and
• in the case of a trust RAC, the trustees or any member of the trust RAC.

An appeal to the High Court on a point of law from a determination of the Pensions Authority in relation to a scheme or trust RAC may be brought by the person who made, or a person who was entitled to make, the application concerned not later than 6 months after the date of that determination of the Pensions Authority.

One-member arrangement: transitional provisions

As respects a one-member arrangement established before the coming into operation of the relevant part of the 2021 Regulations, that part shall only on and from the expiry of 5 years from the date of such coming into operation apply to such one-member arrangement.

Whistleblowing

The following obligation apply to a person who

• is an auditor of the scheme or trust RAC, or
• is an actuary of the scheme or trust RAC, or
• is a trustee of the scheme or trust RAC, or (ca) is an administrator, investment manager or custodian of the PRSA, or is a registered administrator, or (
• is an insurance intermediary (within the meaning of section 2 of the Investment Intermediaries Act, 1995), in relation to the scheme or trust RAC, or
• is an investment business firm (within the meaning of section 2 of the Investment Intermediaries Act, 1995), and – (i) has advised on the scheme, trust RAC or PRSA, or (ii) has received any payment in relation to the investment of any of the resources of the scheme, trust RAC or PRSA, or
• has been instructed to prepare, or who has prepared, an annual report of the scheme or trust RAC in accordance with section 55, or
• has been appointed by the trustees of the scheme or trust RAC to carry out, or who is carrying out, any of the duties of the trustees of the scheme or trust RAC under section 59, or (h) is the PRSA provider, or (i) is a PRSA actuary, or (j) is an auditor of the business of a PRSA provider, or (k) is an employee of an employer referred to in section 121, or (l) is a key function holder, or (m) is a depositary referred to in Part VIB..

Where one of the above  has reason to believe that –

•  there is a substantial risk that the scheme or trust RAC will not comply with a materially significant requirement under the Pensions Act or any other enactment which could have a significant impact on the interests of the members and beneficiaries, or
• a significant material breach of requirements under the Pensions Act or any other enactment applicable to the scheme or trust RAC and its activities has occurred in the context of the key function of that relevant person, and –

the relevant person has reported his or her belief to the trustees of the scheme or trust RAC, and) the trustees of the scheme or trust RAC have failed to take appropriate action to remedy the risk or breach within 21 days of the report made to them  the relevant person shall inform the Pensions Authority of that substantial risk or significant material breach as soon as reasonably practicable from the expiry of the period referred to.