WHAT SHOULD YOU DO NOW?
The amendments to the Pensions Act are now law and therefore many of the new requirements and responsibilities are already in place
There are some areas of the legislation where additional clarity would be very helpful. In that regard, the Pensions Authority have indicated that their intention is to publish a draft “code of practice” in mid-July 2021 setting out what the Authority expects from pension schemes when it comes to meeting their obligations under the Regulations. A final code of practice which will be published in November together with additional guidance on the submission of the new Annual Compliance Return (ACR).
Regulatory focus
The enactment of legislation effective immediately has put many pension schemes in a very challenging position. It is clear that most pension schemes have found themselves suddenly out of compliance with the requirements of the Pensions Act and need to put an action plan in place to address all areas of non-compliance.
The Pensions Authority has indicated that its immediate focus will be on multi-employer “master trust” arrangements and that it expects full compliance with all obligations from such arrangements by 1 July 2022. The immediate regulatory focus for one-member arrangements will be on compliance with the investment requirements relating to borrowing and to being predominantly invested in regulated markets (as outlined in the Investment section these schemes previously had a derogations in this this area).
As regards standard occupational pension schemes, the Pensions Authority indicates that it expects to see evidence from these schemes of a plan with specified timelines and progress milestones to achieve compliance with all obligations under the Act. The Authority has stated in respect of these schemes: “From the beginning of 2023, the focus of the Authority for these schemes…will be on full compliance with all obligations under the amended Act.”
Immediate Priority
The following are therefore key steps for the trustees of any pension scheme:
Carry out a detailed review of the existing structures in place and a gap analysis of actions required to ensure compliance.
Rank the actions required in terms of priority and put a detailed project plan in place with clear responsibilities, deliverables, specified timelines and progress milestones to achieve compliance with the new requirements.
Carry out an audit of the skills and experience of your trustee board and consider any actions arising to address deemed shortcomings.
Take steps to appoint a Risk Function holder and put a separate plan in place to review the risk management strategy in place. Agree a plan for the identification, management, monitoring and reporting of key risks.
Take steps to appoint an Internal Audit Function holder.
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