IRISH INSTITUTE OF PENSIONS MANAGERS SEMINAR UPDATE ON PENSIONS BOARD ACTIVITIES Mary Hutch Head of Information & Training The Pensions Board25 March 2004

1. Agenda PRSAs Funding Standard Pensions Simplification EU Pensions Directive National Pensions Awareness Campaign Investigations and Compliance Registration and Fee Collection Information and Guidance Priorities for 2004

2. PRSAs Approval – Availability - Promotion First Products Approved February 2003 First Products available May 2003 Now 10 Providers with 56 Products  23 Standard  33 non-Standard 3 Sets of Returns – June, September, December 2003 End June 2003  2,550 contracts → €1.4 million asset value  60/40 in favour of Standard PRSAs

3. Approval – Availability - Promotion End December 2003  19,022 contracts → €41 million asset value  77/23 in favour of Standard PRSAs Promotion Via:  National Pensions Awareness Campaign (NPAC)  Liasion with PRSA Providers CSO Pensions Coverage Module  Results due Summer 2004  Building block for 2006 review

4. PRSAs Monitoring and Compliance Pre 15 September 2003  Publication and mass distribution of 3 Information booklets  Participation in IBEC Roadshows on PRSAs and employers’ obligations  Various NPAC activities PRSA Compliance Strategy Published on Board’s Website Compliance Audits  127 conducted to date  48 closed  79 ongoing ‘Whistleblows’  46 to date  32 closed  14 ongoing Social Welfare Inspectorate to assist with Compliance Process  Commencing April 2004  10,000 inspections per annum expected

5. Funding Standard Short Term Measures Funding Problems in DB Schemes due to falling stock markets Board concerned to:  Retain as many DB Schemes as possible  Subject to protecting members’ interests Social Welfare (Miscellaneous Provisions) Act, 2003 includes provisions to respond to short term funding difficulties Section 49 (3) of Pensions Act allows Board to be flexible about specifying date of next AFC Section 49 (3) Guidelines  Published on Board’s website  Issued to representative organisations

6. Funding Standard Long Term Measures Board also reviewing long term requirements  Objective to have standard going forward which will most effectively protect members’ interests Review is examining effectiveness and appropriateness of Funding Standard in light of national and international experience Board has reviewed timescale which is most appropriate to arrive at optimal outcome Timescale published so all involved will be aware of plans for timing of introduction of changes

7. Funding Standard Long Term Measures September – November 2003Further consideration within Pensions Board of options for change in Funding Standard with Particular reference to possible changes in statutory priorities on scheme wind-up. November 2003Pensions Board decision on whether to recommend changes in statutory priorities on scheme wind-up and, if so, submission of proposals to Minister. December 2003Announcement as to whether changes in statutory priorities on scheme wind-up are accepted by Minister with a view to inclusion in Social Welfare Bill, January – March 2004Further consideration within Pensions Board of possible changes to Funding Standard other than changes in statutory priorities on scheme wind-up. March – April 2004Preparation of consultation document. Early May 2004Issue of consultation document. Early May – early July 2004 (2 months)Period during which responses can be made to consultation document. July – September 2004Pensions Board meetings with bodies which have given responses to consultation document and Consideration of responses within Board. September/October 2004Finalisation of proposals within Pensions Board. October 2004Submission of proposals to Minister. Early 2005Publication of proposals in Social Welfare Bill, 2005 (assuming legislation required and approved).

8. Pensions Simplification Simplification of Regulation Board concerned that accumulated effect of regulatory requirements has inhibiting effect on overall pension provision Ways being examined to ensure appropriate balance achieved between:  Regulatory requirements  Member protection  Cost of pension provision In 2002 a number of interim recommendations on simplification identified Working Party involving relevant Government Departments and Board examined range of short term measures to simplify tax treatment of various types of pension provision  Interim Recommendations lead to number of pensions related provisions in Finance Act, 2003  Further simplifications to be considered for inclusion in Finance Bill, 2005

9. Pensions Simplification Disclosure of Information Regulations Legislation Committee has been drafting revised Disclosure Regulations Draft regulations issued for consultation to representative bodies on Board in 2002 Feedback from consultation process decided Board to adopt more simplified approach to regulations Legislation Committee since engaged in drafting regulations into more simplified form Expected to issue revised regulations in latter part of 2004 Follow-on is to look at simplification of any further regulations

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11. Campaign Overview Just over half (50.7%) of the Irish workforce currently have supplementary cover, as identified in the CSO Quarterly National Household Survey, Pensions €500,000 was made available to carry out a National Pensions Awareness Campaign (NPAC), on behalf of Government in 2003 and again in The Board established a NPAC – Project Team to devise an awareness strategy and implementation plan for this important project. The primary objective of the campaign is to heighten pensions awareness with the view to increasing pension coverage in Ireland. (front row - from left to right ) Kevin Brabazon, Board Member; Anne Maher, Pensions Board. (back row - from left to right) David Malone, Pensions Board; Carmel Foley, Board Member; Rita Morrissey, DSFA; Paul Cunningham, DSFA; Ciaran Long, Board Member; Mary Hutch,(Chairperson), Pensions Board; Aongus Horgan, Pensions Board.

12. The National Pensions Awareness Campaign All the actions within the Campaign are designed to be sharp calls to action. Using our Tag Line - Think about tomorrow. Today. TVAdverts Radio Adverts Media print supplements Posters Internet Adverts Radio and Press interviews Community Forums will all focus on directing people into action – to either talk to their employer, contact their bank, insurance company, building society or financial advisor to discuss pension options.

13. Support Agencies promoting NPAC Contact has been made with the wide range of support Agencies who have agreed to assist in delivering the NPAC message to their constituent clients and members. These include: ICTU IBEC SFA CCI ISME Institute of Personnel and Development Other organisations and group involved in this process include: Comhairle Citizen Information Centres IFA / ICA National Library Network Rural Leader Groups Area Partnership Companies Hotels Federation LVA and VFI Restaurants Association

14. EU Pensions Directive General Came into force on 23 September 2003 EU Member states have 2 years to implement i.e. must implement by 23 September 2005 Key aims  ensure protection for pension plan members  Liberalise investment environment for pension plans in EU  Remove barriers to cross-border pension plans Differentiates between national pension plans and cross-border plans Provides legal framework for Pan-European pension plans

15. EU Pensions Directive Implementation Process Establishment of 2 EU Committees  European Insurance and Occupational Pensions Committee (EIOPC) consists of Finance Dept officials/policy level  Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) consists of supervisors/technical level Irish national plan for implementation process  Not yet decided  Issues to be agreed include time frame, consultation process, separate legislation or inclusion in other legislation  Aim is to implement in April 2005 through Social Welfare Act 2005 National decision on content of implementation involves  Agreement on where current Irish legislation needs to be amended to meet Directive  Decisions to be made where member state can decide approach

16. Investigations and Compliance Investigations  2003 Investigations on par with previous years but significant rise in ‘WHISTLEBLOWS’ >Standard Cases43 >‘Whistleblows’52 95 >Closed Cases84  ‘Whistleblows’ almost exclusively related to reports concerning non-compliance with Remittance of Contributions Provisions Disclosure Compliance – Audits  216 undertaken in 2003 >Successful prosecutions as a result2 >A number of cases under consideration for prosecution as a result  Otherwise generally satisfactory results

17. Investigations and Compliance Minimum Funding Standard Funding Certificates  AFCs Received482  Satisfied MFS408  Did not satisfy MFS74 Funding Proposals  Received and Approved52  Pending22* * 6 relate to schemes which have made applications to Board under Section 49(3). Further 6 schemes have indicated to Board that section 49(3) application is to be made shortly. Section 49(3) Applications  Applications Received in > of which:  Granted20  Refused 2  Under Assessment 3  Awaiting Further Information 1

18. Investigations and Compliance Occupational Pension Schemes Compliance Strategy  Strategy Document agreed by Board, December 2002 > Published on Board’s website  Ethos of strategy is that any breach of Pensions Acts requirements is subject to prosecution  The strategy deals with > Disclosure Compliance > Investigations > Funding Standard > Fee Payment > Remittance of Contributions

19. Registration and Fee Collection Processes During 2003 Board cracked down on schemes with outstanding fees Most of amount due was recovered without recourse to legal action  Costly in terms of time and effort  Legal route likely to be considered in future where fees remain unpaid Board is reviewing scheme registration procedure during 2004 which will involve  Simplification of the process  Further co-operation with Revenue  Making use of technology  Supporting risk based compliance monitoring

20. Information and Guidance Information Activities Information Booklets  3 new booklets published under auspices of NPAC  ‘Women & Pensions’ 2 nd edition launched under NPAC  Other booklets in series being gradually updated to reflect 2002 Act changes  FAQ booklet on Pensions (Amendment) Act, 2002 a “bestseller”! Information Presentations  40 given by Board personnel in 2003, many as part of NPAC Website  ‘New look’  ‘FAQs hugely popular  ‘Whats new’

21. Pensions Board Website Statistics 2003

22. Information and Guidance Information Activities Enquiry Services  Radical increase in enquiries in 2003  Lo Call (NPAC) PB Bulletin  Issued 3-4 times per annum  Covers Board developments and current activities Media Relations  Essential for communication information about Boards activities  Promoting pensions coverage

23. NATURE OF ENQUIRIES NumberNumberNumber Number Number Preliminary & General 1,636 1,7751, Establishment of Board , Preservation Funding Standard Disclosure 1, Trustee Duties Equal Treatment Compulsory & Voluntary Reporting & Miscellaneous Applications to the High Court PRSAs 2,778 Pensions Ombudsman 13 *Other Enquiries 14391,9731,376 1,591 1,037 Total**7,7305,3664,411 4,143 3,216 *Other enquiries include matters which do not come under the Board’s remit i.e. personal pension plans, fixed term workers, social welfare entitlements, permanent health insurance. ** The number of enquiries exceeds the number of enquirers as some enquirers raised more than one question.

24. CATEGORY OF ENQUIRERS NumberNumberNumberNumber Number Pensioner Active Member 1,8911,2021,2891, Company/Employer 1, Trade Union Pension Practitioner Trustee *Other 2,5412,216 1,340 1,2361,049 Total6,9945,1764,026 3,8232,994 *Other enquirers include non-members of schemes or PRSAs, research students, media, Government Depts.

25. Information and Guidance Guidance Activities Legislation Service  Represented in 2 Volumes Guidance Notes Service  Represented in more efficient format  8 sets currently available  Guidance on revised equality provisions to be prepared during 2004 FAQs on  Remittance of Contributions  Part Time Work  Women & Pensions  PRSAs  Occupational Pensions  Pensions (Amendment) Act, 2002 All on Board’s Website Trustee Support Services  Enquiries  Trustee Handbook and Codes of Practice – 2 nd edition due Summer 2004  List of Training Courses  Trustee Training Surveys

26. Priorities for 2004 Progress towards resolution of DB scheme funding issues Steady PRSA progress EU Pensions Directive Changes agreed Plan in place for better register Successful NPAC 2004 Improved public confidence in pensions