As you know, in late April 2021 the EU IORP II Directive was transposed into Irish Law making significant changes to the Pensions Act. This blog details these changes.
The changes arising as a result of the IORP II requirements have implications for both the establishment of new employer pension schemes and for existing pension schemes. However, the revised Pensions Act also laid out a transition timeframe, granting a limited period of grace for employers and trustees on some existing pension schemes, notably a five year derogation from certain requirements for one-member arrangements (OMAs) established prior to 21 April 2021.
When we wrote to you in June 2021, (IORP II – Continuing to do business with Zurich – a range of trustee models) we provided you with details of the options available for trusteeship.
In particular, we highlighted four trustee models:
Choosing Zurich Trustee Services Limited (ZTSL) to act as trustee
Appoint a professional trustee
Lay trustee board
Zurich Master Trust
One-member Executive Pension Plans
In the same communication we also referred to new Zurich Executive Pension Plans (EPP’s) established after 21 April 2021. As EPPs are OMAs, we recommended that you carefully consider whether to continue writing new business with the employer acting as trustee – and suggested that it may be better to choose ZTSL as trustee for all your new EPP cases.
At the time, the Pensions Authority indicated that they expected new (i.e. post 21 April 2021) OMA’s/EPP’s to comply in full with the requirements of IORP II from July 2022. We stated that this would be challenging or indeed impossible for new one-man schemes where the employer was the Trustee. We therefore took the decision to close-off the option of OMAs/EPPs with the Employer as acting as trustee, as communicated in our email of 1 July 2021 (IORP II – Changes to one-man Executive Pension Plans).
However, there were a small number of new OMA’s/EPP’s with the employer as trustee which were submitted and issued after 21 April 2021. The Pensions Authority has stated that any OMA set up on or after 22 April 2021 must meet the full requirements of the Pensions Act, including the new requirements of IORP II, by 1 July 2022.
If you have not done so already, you may wish to contact these clients to review whether they wish to continue with their arrangements in the current format with the employer as trustee. Those clients may wish to consider transferring to an alternative arrangement, such as a Personal Retirement Savings Account (PRSA) or a Personal Retirement Bond (PRB). Options for future pension funding going forward can also be reviewed.
If you have a query on any of the above points, please feel free to contact your Zurich Life Broker Consultant in the first instance.