1. www.pensionsauthority.ie The Pensions Authority – Functions, Operation and Objectives Fionnuala Ryan Compliance Unit The Pensions Authority 12 April 2016

2. www.pensionsauthority.ie Agenda About the Pensions Authority Regulatory Approach Role of Trustees, Registered Administrators and Employers Defined Benefit Schemes Reform of Defined Contribution Schemes The Pensions Authority Strategy and Regulatory Priorities for 2016

3. 1. About the Pensions Authority

4. www.pensionsauthority.ie Pensions Authority Established by the Pensions Act, 1990 CompliancePolicyInformation

5. www.pensionsauthority.ie Organisation Chart Pensions Authority David Begg (Chairman), Anne Nolan (DoF), Anne Vaughlan (DSP) Compliance Funding and Actuarial PolicyLegal Operations and Communications Corporate Services Pensions Regulator Brendan Kennedy

6. www.pensionsauthority.ie 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.

7. www.pensionsauthority.ie Operating Context Economic and Fiscal Background Demographic Pressures and Longevity Government Policy Defined Benefit Provision Compliance and Regulation Statutory Remit

8. www.pensionsauthority.ie Supplementary pension provision in Ireland (as at 31 December 2015)  Defined benefit 715 schemes with 125,955 members are subject to the Funding Standard 99 schemes with 339,155 Public Service members (full and part-time)  Defined contribution 67,125 schemes with 281,629 members  Personal Retirement Savings Accounts (PRSAs) 237,608 PRSAs with asset value of €5.2 billion  Personal Pension Plans/Retirement Annuity Contracts (RACs) (200,000 + contracts – Irish Insurance Federation)

9. www.pensionsauthority.ie Pensions Coverage in the Irish Workforce

10. www.pensionsauthority.ie Recent Developments In February 2015 the Tánaiste and Minister for Social Protection, Joan Burton T.D., announced a series of measures aimed at: tackling Ireland’s low rate of workplace pension coverage improving consumer confidence in the system ensuring greater efficiency and oversight of pension schemes. The measures include : The Department of Social Protection and the Pensions Authority continuing to work together to reform and simplify the pensions landscape. A Universal Retirement Savings Working Group has been established which will consider the constituent factors involved in constructing an efficient and effective universal retirement savings system. The Pensions Council, has been established to help strengthen the pensions environment and give consumers greater input into pension policy.

11. 2. Regulatory Approach

12. www.pensionsauthority.ie We supervise 180,000 plus trustees - connected to 160,000 (approx.) schemes 142 Registered Administrators 131 PRSA products managed by 14 PRSA providers

13. www.pensionsauthority.ie Pension assets under management €100 Billion + (circa)

14. www.pensionsauthority.ie The Legal Framework for Pensions Trust Law and Equitable Principles The Trustee Acts 1893 and 1958 Trust Documents Revenue Requirements EU Law The Pensions Act 1990 Regulations Statutory Guidance

15. www.pensionsauthority.ie 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.

16. www.pensionsauthority.ie 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.

17. www.pensionsauthority.ie 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  A register of trustee training providers is available on the website  An e-learning facility for trustees which is free of charge and can be accessed on the website

18. www.pensionsauthority.ie Sanctions for non-compliance Pensions Authority Prosecutions: The Authority may take prosecutions against persons who breach provisions of the Act or Regulations made there-under: Offences can be prosecuted by the Authority on summary basis (District Court) or by DPP on indictment (Circuit Court) On summary conviction- a fine not exceeding €5,000 or imprisonment for term not exceeding 1 year or both On conviction or indictment by DPP- a fine not exceeding €25,000 or imprisonment for term not exceeding 2 years or both (or in the case of a prosecution under Section 58(a) a fine not exceeding €25,000 or imprisonment for term not exceeding 5 years or both)

19. www.pensionsauthority.ie On-the-Spot Fines Commenced on 17 September 2007. Fine of €2,000 for prescribed offences. Examples:  Trustee Training  Payment of Fees  Registering the Scheme  Failure to disclosure prescribed information to members or to the Authority  Failure to respond to requests for information  Failure to provide an Actuarial Funding certificate See the Pensions Authority check-list for on-the-spot fines for full list of offences liable to an on-the-spot fine.

20. www.pensionsauthority.ie The Authority’s Pensions Data Register (PDR) The PDR holds data on all occupational pension schemes and allows Registered Administrators (RAs) and interested parties (external users) to submit and manage data submissions to the Authority including: –Scheme registrations –Annual Scheme Information (ASI) –Actuarial Funding Certificate (AFC) –Funding Standard Reserve Certificate (FSRC) –Annual Actuarial Data Return (AADR) –Amend and update scheme details such as names of trustees –Pay scheme fees 240,000 data submissions were processed in 2015 The Authority will continue to move more reporting obligations online over the coming months and years.

21. www.pensionsauthority.ie Supervisory Methodology Whistle Blow Reports and Investigations Review of Data Submitted by Schemes on PDR Desk Based Audits and Reviews On-site Inspections of Schemes On-site Inspections of Registered Administrators Meetings with Trustees and their Advisors

22. www.pensionsauthority.ie Compliance activity in 2015 45 new investigations were opened into various alleged breaches of the Pensions Act. 66 investigations were finalised and closed during the year 4 onsite inspections of Registered Administrators (RAs) were carried out 60 meetings were held with trustees, pension providers and public service administrators to discuss a range of compliance issues. 225 schemes were audited for compliance with their 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

23. www.pensionsauthority.ie Prosecutions and High Court Orders - 2015 In 2015, 37 prosecutions cases were concluded. The Authority secured convictions in 22 cases. Defendants received the benefit of the Probation Act in 4 other cases and a further 10 cases were struck out due to payment of arrears. One case was dismissed on appeal. In total, fines of €38,890 were imposed. 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). The Authority obtained a High Court Order for the removal of a trustee and a subsequent appointment of a replacement trustee.

24. 3. Role of Trustees, Registered Administrators and Employers

25. www.pensionsauthority.ie Main duties of Trustees under the Act Section 59 Duties Ensure employer and employee contributions are received and invested within prescribed timeframes. Proper investment of the scheme resources Making arrangement for paying benefits. Keeping proper membership and financial records. Undertake trustee training every two years Apply the resources of the scheme with undue delay when a decision is taken to wind up the scheme. Ensure at all times that a Registered Administrator is appointed. Other Requirements of the Act Registering the Scheme with the Authority within 1 year of establishment and the payment of fees. Make arrangement for leavers i.e. transfer or preservation of benefits. Disclosure of specified information to members, prospective members and others. Production of a trustee annual report Ensuring the accounts of the scheme are audited and that actuarial valuations and actuarial funding certificates are prepared. Comply with principles of equal pension treatment. Report material misappropriation or fraudulent conversion of schemes resources to the Authority.

26. www.pensionsauthority.ie Registered Administrators (RAs) From 1 November 2008 trustees of every scheme must appoint an RA to provide core administration functions. Core administration functions are: -preparation of annual reports -preparation of member benefit statements -maintenance of sufficient and accurate member records to discharge above -Other prescribed duties (i.e Annual Scheme Information Returns)

27. www.pensionsauthority.ie Employers’ Pension Obligations By law an employer must provide ALL employees with some form of access to a pension, whether they are in full-time, part-time, temporary, contract or casual employment. All employers regardless of their size are obliged to provide access to a Standard PRSA for “excluded employees.” Remittance of Occupational Scheme contributions and disclosure obligations.

28. 4. Defined Benefit Schemes

29. www.pensionsauthority.ie Defined Benefit Schemes As at 31 December 2015: 60% of defined benefit schemes (not in wind-up) were in compliance with the funding standard as at 31 December 2015. All but nine of the remainder have agreed funding proposals designed to bring the scheme into compliance with the standard 13 funding proposals were received from defined benefit schemes and the Authority specified a later date in respect of all of these proposals 13 applications to reduce accrued benefits were received from defined benefit schemes and all were approved by the Authority.

30. www.pensionsauthority.ie Benefit Reductions (Section 50) Authority can issue S50 directions where scheme fails funding standard. Trustees must disclose certain information to members, beneficiaries and trade unions. Members, beneficiaries and trade unions have six weeks to make written observations to the Authority.

31. www.pensionsauthority.ie Engagement with DB Trustees Commenced in H2 2015. Meetings with Authority Representatives. No advisors present.

32. 5. Reform of Defined Contribution Schemes

33. www.pensionsauthority.ie Background to reform Problems with pensions system Charges Too many schemes Too many trustees Multiple pension products Consultation process

34. www.pensionsauthority.ie Trustee Qualifications Consultation outcome Minimum relevant qualification Meetings with educational providers Consultation process 30 submissions analysed – synopsis published

35. www.pensionsauthority.ie Model Disclosure Documents Consultation outcome Need for more simplified information Working group established 7 model documents produced to date SIPPs pending Disclosure regulations need to be reviewed

36. www.pensionsauthority.ie Pensions Simplification Top-down approach Reduce number of pension vehicles Harmonise tax rules Review of Part X

37. www.pensionsauthority.ie DC Codes Education/Information Best Practice Recommendations Status of DC Codes Codes Issued to Date 1.Governance Plan of Action 2.Trustee Meetings 3.Managing Conflicts of Interest 4.Collections and Remittance of Contributions 5.Investing Scheme Assets 6.Paying Benefits

38. www.pensionsauthority.ie 1. Governance Plan of Action Identify actions Timeframes Procedures Ownership Monitor progress

39. www.pensionsauthority.ie 2. Trustee Meetings Frequency Timing Agenda Preparation Decisions Minutes

40. www.pensionsauthority.ie 3. Conflicts of Interest Identification Management Monitoring Conflicts register and policy Legal advice

41. www.pensionsauthority.ie 4. Collection and Remittance of Contributions Timeframes Monitoring Payment Schedules Procedures SLA’s Recovery of missed or late payments Informing the Authority and members

42. www.pensionsauthority.ie 5.Investing Scheme Assets Appropriate Strategy SLAs and Reporting SIPP Reviews Monitoring Performance Benchmarks

43. www.pensionsauthority.ie 6. Paying Benefits SLAs with administrators Taxation and PAOs Notifying Members of entitlements Reports Reviews

44. www.pensionsauthority.ie Next steps on DC Reform Development of reform proposals through 2016 Further consultation All proposals subject to Government decision If implemented, careful transition essential

45. 6. Pensions Authority Strategy and Regulatory Priorities for 2016

46. www.pensionsauthority.ie Strategy 2016- 2020 Continued focus on use of data analysis to focus regulatory efforts. Use regulatory activity to identify where information and guidance is most needed. Produce model documents and codes of governance and guidance to encourage compliance. Continue to improve the quality of information we provide to the public. Continue to raise awareness of our role and build our public profile. Advise the Minister for Social Protection in developing a blueprint for the pensions system of the future. Assist the Universal Retirement Savings Group through the provision of data analysis and research.

47. www.pensionsauthority.ie Priorities for 2016 A varied programme of proactive compliance activity, including on-site inspections of administrators, reviews of PRSA compliance, desk compliance audits, and checking of employer pension access provision. Resolution of the small number of defined benefit schemes whose funding position have not been resolved, which may include issuing orders for wind- up where appropriate. Significant increase in programme of engagement with trustees of defined benefit and defined contribution schemes. Further guidance for all trustees, including further codes of practice for both defined contribution and defined benefit scheme trustees and further model documents. Updating the Pensions Authority website to improve navigation and make it more user-friendly. Development of pension reform proposals for submission to the Department of Social Protection

48. www.pensionsauthority.ie Thank you