IRISH INSTITUTE OF PENSIONS MANAGEMENT

Transcription

1 Volume 3 Issue 1 December 2012 Irish Institute of Pensions Management IRISH INSTITUTE OF PENSIONS MANAGEMENT Deferred members - gone but not forgotten? - by Ms Peggy Hughes Partner at MASON HAYES & CURRAN Background The days of a job for life are all but dead and gone. People nowadays often have more than one job during their working lives, indeed some have more than one career and, in the current economic climate in particular, people increasingly have more than one country of residence during their working lives. Such flexibility and adaptability is commendable in any workforce and brings many benefits to the workplace but it also brings challenges. These changes in work patterns are reflected in difficulties for the management of pension pots left in the wake of this mobile workforce as it moves from job to job and country to country. Unless action is taken to address the issues at a national level, the challenges are sure to become a greater problem for trustees and employers and, indeed, all stakeholders in terms of compliance, administration and cost. Not to mention the potential issues for the individuals themselves whether in terms of erosion of the value of their fund through fees, inflation or simply through losing the pot with the inability to trace back through employers who may have ceased to exist, merged or been taken over. Looking at the UK for instance, recent Department of Work and Pensions statistics indicate that 1 in 6 people have no idea where their pension is saved. Currently there are approximately 3bn sterling worth of funds in dormant workplace pensions and by 2050 it is predicted that there will be 50 million dormant workplace pensions with over 12 million of them holding funds of less than 2,000 sterling. The huge increase is anticipated due to job mobility, the advent of auto-enrolment and the end of short service refunds. While the scale is no doubt smaller in Ireland, we also face similar job mobility issues and the possibility of an auto-enrolment system. Clearly there is a need to manage this group of members and their benefits effectively. Current position As we all know, when a scheme member terminates relevant employment and the individual is entitled to a benefit under a pension scheme, that benefit is deferred until retirement and may or may not be preserved under the terms of the Pensions Act While the individual will have a number of options, many simply leave their pension pot in the former employer s pension scheme and, with the passage of time thereafter, the administration of the benefits left behind can prove both difficult and costly. In this issue: Page 1& 2-Deferred Members by Ms Peggy Hughes Page 3 Annual Dinner Page 4 Budget Highlights & Fellowship awards. Page 5 Christmas Quiz Page 6 Upcoming Events Page 7 Seasons Greetings

2 Volume 3 Issue 1 December 2012 Irish Institute of Pensions Management IRISH INSTITUTE OF PENSIONS MANAGEMENT Trustee compliance issues are also a concern. Trustees must act in the best interests of scheme members and that duty will always be on their minds. However, they also only have to look at Section 59 of the Pensions Act 1990 to find some additional duties which will be of particular concern in relation to deferred benefits including: (a) to provide for the proper investment of the resources (b) where appropriate, to make arrangements for the payment of the benefits as provided for under the rules of the scheme as they become due, whether in the State or in any other Member State (c) to ensure that proper membership and financial records are kept (d) if a scheme is wound up, to apply the resources in discharging liabilities without undue delay It s clear that trustees may have significant difficulties, even on a purely practical level, in meeting their obligations under Section 59 indefinitely in respect of deferred members as contact with those members diminishes. So what can trustees to do with deferred benefits? Section 35 of the Pensions Act 1990 and related regulations permit transfers of preserved benefits without member consent to one or more buy out bonds but only in certain circumstances including where the Pensions Board grants an application from the trustees. Where the deferred benefit is not preserved the trustees options will depend on the scheme rules. The options may include taking a transfer out of the scheme or simply remaining as a deferred member. In any event, trustees are often limited in their options for handling deferred benefits if the deferred member fails to take a transfer out. The trustees are then faced with meeting all their duties and obligations for a section of their pension scheme which, in many instances and increasingly, far exceeds the active scheme population in number and with whom they gradually lose contact. The scale of the difficulties is large and increasing and in some cases is way beyond the capacity of many trustees and employers to manage on their own. What next? While trustees and employers should have their own plan for managing deferred members as pro-actively as possible, the issues probably warrant a more co-ordinated effort. Perhaps it is time to revisit the National Pensions Framework of 2010 which advocated, among other things,: A tracing service to facilitate the tracing of pensions by former employees and scheme trustees Consideration be given to the establishment of a State managed fund into which untraceable accounts would be deposited. These suggestions are not all that different from what is happening elsewhere but, to my knowledge, there has been no progress on them either to move them forward if deemed appropriate or to consider alternatives. If discussions at a recent IAPF seminar on the issue is anything to go by, there appears to be a considerable body of opinion which believes that it may be time for a wide ranging conversation on this issue to develop national management strategies. Whatever the solution or solutions, it seems the time has come at least for an informed national discussion but preferably one with some swift follow up action to address the issues sooner rather than later.

3 Volume 3 Issue 1 December 2012 Irish Institute of Pensions Management IRISH INSTITUTE OF PENSIONS MANAGEMENT IIPM ANNUAL DINNER The 24th Annual Dinner of the IIPM was held in the St Stephen's Green Hibernian Club on 30 November last with almost 90 guests in attendance. Certificates were presented to a number of new Members, Associates and Fellows and the President, Martin Condon, in his address stressed the strong relationship that had now been established with the National College of Ireland and noted the large number of students now studying for IIPM qualifications. A notable highlight over the year was the selection of our Certificate course for the Government's Springboard Programme and over 30 students are now enrolled at the NCI as part of this programme. Susan Andrews, PMI President and Vince Linnane, CEO of the PMI were in attendance and the Guest Speaker, the renowned Irish journalist Mary Kenny, gave a wide ranging talk on the theme of ''From the Swinging 60s to the Golden Years''. A most enjoyable evening was had by all and a special word of thanks to Irish Life for their sponsorship, to Joan Bray for organising the event and to Andrew Kershaw who acted as MC for the evening.. Left:Mr Martin Condon presenting flowers to the guest speaker Ms Mary Kenny. Right:Mr Kieron Knight receiving his Fellowship ( FIIPM) Certificate. Left: Mr Joe Bracken receiving his AIIPM Certificate. Right :Mr Jonathan Kerr receiving his AIIPM Certificate.

4 IRISH INSTITUTE OF PENSIONS MANAGEMENT BUDGET 2013 A Pensions Perspective. Following the recent Budget on the 5th December 2012, please see below the key highlights which impact on pensions. Budget 2013 Pension Highlights Tax relief on contributions to pensions will continue at marginal rates. No change in the maximum contributions eligible for tax relief (i.e. still age related percentage of 115,000). No immediate change in the Standard Fund Threshold, but a maximum tax subsidised pension of 60,000 per annum will be introduced in No change to the amount of the State Pension ( per week) Option to withdraw part of accumulated AVCs, subject to tax and details to be included in the 2013 Finance Act. Commitment from Minister Noonan that the Pension Levy will not continue beyond June Fellowship Awards The IIPM are delighted to announce that the following Associates were recently honoured as Fellows of the institute and can now use the FIIPM designation. Mr Kieron Knight Mr Stephen Doyle Mr Peter Griffin Mr Joseph O Brien Congratulations to you all on your award. Page 4

5 IRISH INSTITUTE OF PENSIONS MANAGEMENT IT S QUIZ TIME!!!!! Christmas Quiz 2012 So, let's see how much you know about the Institute and its activities! The quiz is open to all IIPM Students, Members, Associates and Fellows. Please RSVP your answers to before 5.00pm on Thursday December 20 th 2012 and the first correct entry drawn from a hat will receive a prize of a wine hamper! 1) Where are the offices of the IIPM Located? 2) What does the Designation MIIPM, AIIPM & FIIPM stand for? 3) What three Pension courses are available at NCI? 4) What is the name of the guest speakers that delivered the De- risking Presentation at the IIPM Seminar on the 20th September 2012? 5) What date does the CPD return need to be completed and returned by? The Best of Luck! Page 5

6 IRISH INSTITUTE OF PENSIONS MANAGEMENT Upcoming Events 2013 Seminar Speaker Date & Time IIPM/CPD Seminar Ms Rachael Ingle & Mr Eoghan Burns January 31st 2013 at 5.30pm Venue National College of Ireland, IFSC, Mayor Street, D1. RSVP Dates for your dairy. IIPM Seminars will also take place on the dates outlined below. The Topics & Speakers will be advised in early February 28th March 28th Exam Timetable 2012/2013 Diploma in Pension Management & Policy & Certificate in Pensions, Investments & Insurance Module Exam Date Exam Time Pension Scheme Law & Governance 7th Jan pm International Practice 12th Jan pm Investments 14th Jan pm Retirement Benefits 16h Jan pm All exams will be held at NCI. Page 6

7 SEASONS GREETINGS! On behalf of the council of the Irish Institute of Pensions Management we would like to wish all our Members, Associates, Fellows & colleagues a very Merry Christmas and a prosperous New Year.