The current position of pensions in the workplace IPASS Annual Conference 12 May 2016 Tom Dunphy Head of Compliance and Enforcement The Pensions Authority

Agenda The Pensions Authority and legal framework Pensions landscape in Ireland Key actors and responsibilities Regulatory strategy and approach Compliance experience in 2015 and regulatory priorities for 2016 New developments and planned reforms 1

Pensions Authority Established by the Pensions Act, 1990 Supervision, regulation and enforcement Policy advice Information and guidance 2

Our Vision and Mission Vision: A pensions landscape where pension savings are secure, well managed and understandable and which encourages pension savings. Mission: Foster public confidence in pensions by regulating pension schemes and PRSAs effectively and efficiently. Support pension scheme trustees and the public through provision of guidance and information. Provide expert advice to the Minister for Social Protection to help inform policy development. 3

Workplace Pensions - Legal Framework The Pensions Act 1990 and Regulations Trust Law and Equitable Principles Scheme Trust Deed and Rules Revenue Requirements EU Law Statutory Guidance 4

Powers of the Pensions Authority Power to obtain information Investigative powers Fining and remedial powers Prosecution powers Powers exercisable through the High Court Powers to suspend or withdraw approval for certain activities 5

Supplementary pension provision in Ireland (as at 31 December 2015)  Defined benefit 715 schemes subject to the Funding Standard with 125,955 members (€58bn) 99 Unfunded PAYG schemes with 339,155 Public Service members  Defined contribution 67,125 schemes with 281,629 members (€37bn)  Personal Retirement Savings Accounts (PRSAs) 237,608 PRSA contracts (€5bn)  Personal Pension Plans/Retirement Annuity Contracts (RACs) 200,000 + contracts 6

Pensions Landscape Occupational Pension Schemes SchemesMembers DC67,125281,629 DB814465,110 PRSAsProductsContributors Std/Non Std131237,608 Total68,070984,347 PRSAs Defined Contribution Defined Benefit 37% 5% 98% Schemes/Products Assets under investment Active Members 68,070 €100bn 984, % 1.4% 7

Trustee Responsibilities Trust law Act in best interest of beneficiaries Avoid/manage conflicts of interest Exercise utmost good faith Not take personal gain Execute the trust Pensions Act Ensure contributions are received Proper investment of funds Pay benefits Keep proper records Undertake training Appoint a registered administrator 8

Registered Administrators (RAs) Appoint an RA to provide core administration functions. Core administration functions are: -preparation of scheme annual report -preparation of member benefit statements -maintenance of proper records File Annual Scheme Information (ASI) return 9

Employers’ Pension Obligations Employer must provide all employees with access to some form of pension arrangement. Access to a PRSA is required where no scheme in place scheme in place but restricted benefits and eligibility Remit contributions Arrange trustee training 10

The Authority’s approach to regulation The Authority’s allocation of resources is risk oriented on the basis of the following priorities: 1 st priority: misappropriation of pension assets or contributions 2 nd priority: lack of governance or maladministration impacting on benefits / failure to pay benefits due 3 rd priority: defined benefit solvency 4 th priority: failure to provide prescribed information to members 5 th priority: failure by regulated entities to submit accurate and timely data to the Authority. This order represents the seriousness of the risks, not the likelihood of their occurrence. 11

Supporting Trustees The Authority supports trustees in the following ways:  Trustee Handbook  Financial management guidelines for defined benefit schemes  Codes of governance for defined contribution schemes  Model disclosure documents  Information and guidance materials  Information and enquiry service  Register of trustee training providers  e-Learning facility for trustees 12

Supervisory activity in new investigations opened into various alleged breaches of the Pensions Act. 66 investigations finalised and closed during the year 4 onsite inspections of Registered Administrators (RAs) carried out 60 meetings held with trustees, pension providers and public service administrators to discuss a range of compliance issues. 225 schemes audited for compliance with various obligations under the Pensions Act 5 schemes and their respective trustees underwent a comprehensive review by the Authority of the stewardship and administration of their schemes 13

Enforcement activity prosecution cases were taken of which; 22 Convictions 4 Probation Act 10 Struck out (on payment of arrears following summons) 1 Successfully appealed Fines imposed €38,890. The convictions in the 22 cases were as follows: 14 cases related to the deduction and non-remittal of employee pension contributions to schemes (Section 58A(1)) 4 cases related to the non-remittal of employer pension contributions as obliged under the scheme (Section 58A(2)) 4 cases related to failure to respond to a statutory request for information from the Authority (Section 18). High Court Order granted to remove a trustee and a subsequent appointment of a replacement trustee. 14

Regulatory priorities for 2016 Investigating complaints and reports Continuation of the varied programme of proactive compliance activity, including on-site inspections of administrators, themed compliance audits and engagement with schemes Commencing on-site PRSA inspections (second half of 2016) Reviewing scheme governance and oversight Improving data filing (ASI) compliance Identifying and regularising the position of excluded employees 15

Background to reform Charges not transparent and high Too many schemes Too many trustees Multiple pension products/complexity Low coverage 16

Planned reforms Reform of DC Simplification Auto-enrolment 17

For further information Enquiry service Information and Guidance Pension checklists Pension calculators Free Online Trustee Training, Guidance & FAQs, alerts & Trustee supports 18