Scheme Governance
Pensions Act
(1) In this Part –
64AA.
Interpretation for Part
“key function holder” means a person who carries out a key function specified in section 64AH; “outsourced” has, notwithstanding section 2(1), the same meaning as it has in the Directive of 2016.
(2) Without prejudice to section 2(7), a word or expression that is used in this Part and is also used in the Directive of 2016 shall, unless the context otherwise requires, have the same meaning in this Part as it has in the Directive.
System of governance: general provisions (ss. 64AB-64AK)
64AB. General governance requirements
64AC. Governance: requirements in respect of number of trustees
64AD. Requirements for fit and proper management: key function holder and persons to whom key function outsourced
64AE. 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
64AF. Section 64AE: supplementary provisions relating to evidence of compliance with proper requirements
64AG. Remuneration Policy
System of governance: key functions (ss. 64AH-64AK)
64AB.
General governance requirements
(1) Without prejudice to any other provision of this Act, 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 and those trustees shall provide that such system of governance includes –
(a) an adequate and transparent organisational structure with a clear allocation and appropriate segregation of responsibilities which shall –
(i) set out the functions and activities required to manage the scheme or trust RAC, and
(ii) specify the person who is responsible for performing each such function and carrying out any such activity, and
(b) an effective system for ensuring the transmission of information.
(2) The system of governance referred to in subsection (1) shall include consideration of environmental, social and governance factors related to investment assets in investment decisions.
(3) The trustees referred to in subsection (1) shall regularly review the system of governance referred to in subsection (1).
(4) The trustees of a scheme or trust RAC shall ensure that the system of governance referred to in subsection (1) is proportionate to the size, nature, scale and complexity of the scheme or trust RAC concerned.
(5) The trustees of a scheme or trust RAC shall, subject to subsection (6), establish, and apply, written policies in relation to –
(a) risk management,
(b) internal audit, and
(c) where relevant, actuarial and outsourced activities.
(6) The trustees referred to in subsection (1) shall approve the written policies referred to in subsection (5) before those policies are established and applied.
(7) The trustees referred to in subsection (5) shall –
(a) review the policies referred to in that subsection at least once every 3 years, and
(b) adapt any of the policies referred to in paragraph (a) 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.
(8) The trustees of a scheme or trust RAC shall put in place an effective internal control system which shall include –
(a) administrative procedures,
(b) accounting procedures,
(c) an internal control framework, and
(d) appropriate reporting arrangements at all levels of the scheme or trust RAC concerned.
(9) The trustees of a scheme or trust RAC shall, subject to subsection (10), 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.
(10) For the purposes of subsection (9), the trustees referred to in that subsection shall employ appropriate and proportionate systems, resources and procedures.
64AC.
Governance: requirements in respect of number of trustees
(1) A scheme or a trust RAC shall, subject to subsection (2), have at least 2 persons appointed as trustees of the scheme or trust RAC who effectively run that scheme or trust RAC.
(2) Where a body corporate is appointed as the sole trustee of a scheme or trust RAC, the requirement under subsection (1) to appoint at least 2 trustees who effectively run the scheme or trust RAC shall, in the case of such body corporate, be deemed to be satisfied where the body corporate, subject to subsection (3), has at least 2 directors who effectively run that scheme or trust RAC and the requirements of section 59A(1B) are satisfied.
(3) Where immediately before the coming into operation of the European Union (Occupational Pension Schemes) Regulations 2021 –
(a) a scheme or trust RAC referred to in subsection (1) had less than 2 persons appointed as trustees of the scheme or trust RAC who effectively run that scheme or trust RAC, another person shall be appointed as a trustee of that scheme or trust RAC not later than 31 December 2021, or
(b) a body corporate referred to in subsection (2) had less than 2 directors appointed as directors of that body corporate who effectively run that scheme or trust RAC, another person shall be appointed as a director to effectively run that scheme or trust RAC not later than 31 December 2021.
64AD.
Requirements for fit and proper management: key function holder and persons to whom key function outsourced
(1) The trustees of a scheme or trust RAC shall 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 –
(a) is, having regard to section 64AE of good repute and integrity,
(b) 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
(c) where the key function concerned is a key function other than those specified in paragraph (b), possesses the qualifications, knowledge and experience that are adequate to properly carry out that key function.
(2) Where a key function is to be outsourced under section 64AM, 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 –
(a) is, having regard to section 64AE, of good repute and integrity, and
(b) 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
(c) where the key function to be outsourced is a key function other than those specified in paragraph (b), possesses the qualifications, knowledge and experience that are adequate to properly carry out that key function when outsourced.
(3) The Pensions Authority may require, by notice in writing, information from the trustees referred to in subsections (1) and (2) as to whether any person –
(a) who carries out a key function, or
(b) to whom a key function is outsourced under section 64AM, satisfies the requirements of subsection (1) or, as the case may be, subsection (2).
(4) The trustees referred to in subsection (3) shall provide the information requested by the Pensions Authority under subsection (3).
64AE.
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 referred to in sections 59A and 64AD a person, or as the case may be, a body corporate does not satisfy that requirement if –
(a) the person, or as the case may be, the body corporate or any director of that body corporate has been convicted of –
(i) an offence involving fraud or dishonesty,
(ii) an offence of money laundering under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2018, or
(iii) an offence in respect of conduct in a place other than the State that would constitute an offence of the kind referred to in subparagraph (i) or (ii),
(b) the person –
(i) is an undischarged bankrupt,
(ii) has made a composition or arrangement with his or her creditors and has not discharged his or her obligations under that composition or arrangement,
(iii) is, or is deemed to be, the subject of an order under section 160 of the Companies Act 1990, or a disqualification order within the meaning of Chapter 4 of Part 14 of the Companies Act 2014, whether by virtue of that Chapter or any other provision of that Act, or
(iv) is a person to whom a declaration under section 150 of the Companies Act 1990 Act applies or is a restricted person within the meaning of Chapter 3 of Part 14 of the Companies Act 2014,
(c) in the case of a body corporate, the body corporate –
(i) has commenced a voluntary winding-up,
(ii) is subject to a winding-up order or is the subject of proceedings for such an order, or
(iii) has proposed a compromise or arrangement that is sanctioned under section 453(2) of the Companies Act 2014, or
(d) in the case of a body corporate, a director of that body corporate –
(i) is subject to a declaration under section 819 of the Companies Act 2014 made against him or her or deemed to be the subject of such declaration by virtue of Chapter 5 of Part 14 of that Act,
(ii) is the subject of, or is deemed to be subject to, 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.
64AF. Section 64AE: supplementary provisions relating to evidence of compliance with proper requirements
(1) Where –
(a) 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, and
(b) notwithstanding any other requirements that may be specified in this Part in relation to proof of such matters,
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 specified in subsection (2).
(2) For the purposes of subsection (1) and subject to subsection (3), the Pensions Authority shall accept –
(a) an extract from the judicial record of the other Member State, or
(b) 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.
(3) In the event that no equivalent document referred to in paragraph (b) of subsection (2) 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) a declaration on oath made in accordance with the law of the other Member State, or
(b) 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.
(4) Where the Pensions Authority makes a request referred to in subsection (1), the trustees of the scheme or trust RAC shall present the record or document, referred to in subsection (2) or (3), to the Pensions Authority within 3 months of the date of issuance, or date of making, of that record or document.
64AG.
Remuneration Policy
(1) The trustees of a scheme or trust RAC shall establish and apply a sound remuneration policy determined in accordance with the principles set out in subsection (4) in respect of –
(a) the trustees of the scheme or trust RAC,
(b) persons who carry out key functions,
(c) 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
(d) a service provider referred to in section 64AM to whom a key function or other activity referred to in that section is outsourced unless such service provider is covered by the Directives specified in subsection (4)(e).
(2) Without prejudice to section 54(1)(b), unless otherwise provided in Regulation (EU) 2016/679 [OJ No. L 119, 4.5.2016, p.1], the trustees of a scheme or a trust RAC shall regularly disclose publicly relevant information regarding their remuneration policy.
(3) The trustees of a scheme or a trust RAC shall comply with paragraphs (a) to (g) of subsection (4) when, pursuant to subsection (1), establishing and applying the remuneration policy for the scheme or trust RAC.
(4) The remuneration policy established and applied in accordance with subsection (1) shall:
(a) 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;
(b) be in line with the long-term interests of members and beneficiaries of the scheme or trust RAC;
(c) include measures aimed at avoiding conflicts of interest;
(d) 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;
(e) apply to the scheme or trust RAC and to the service providers referred to in section 64AM, unless those service providers are covered by Directives 2009/65/EC, 2009/138/EC, 2011/61/EU, 2013/36/EU [OJ No. L 176, 27.6.2013 p. 338] and 2014/65/EU [OJ No. L 173
12.6.2014 p. 349] of the European Parliament and of the Council;
(f) 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;
(g) provide for clear, transparent and effective governance with regard to remuneration and the manner in which it is overseen.
(5) The trustees referred to in subsection (3) shall, pursuant to paragraph (f) of subsection (4) –
(a) review and update the general principles of the remuneration policy within the period referred to in that paragraph, and
(b) implement the remuneration policy.
(6) The trustees of a scheme or a trust RAC, when establishing and applying the remuneration policy under subsection (1), shall establish and apply that policy in a manner that is proportionate to –
(a) the size and internal organisation of the scheme or trust RAC, and
(b) the size, nature, scale and complexity of the activities of the scheme or the trust RAC.
(7) 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.
System of governance: key functions (ss. 64AH-64AK)
64AH. Key functions: general provisions
64AI. Key function: risk management function
64AJ. Internal Audit function
64AK. Key function: actuarial function for regulatory own funds scheme and regulatory own funds trust RAC