New Pensions Requirements for employers and self-employed people
Are you self-employed and have your own company?
Do you have a pension?
Is the Pension just for you, with no other colleagues?
If you answered yes to any of these questions, it is very likely that your pension is what is called an Executive Pension Plan or a One-Member Arrangement. If so, you may also be registered as the Trustee of that pension scheme. New rules came into force on 22 April 2021 which set out enhanced requirements for one-member schemes set up from that date and which the trustee must make decisions on.
Even if you are not the trustee, you must instruct your trustee on the action to be taken.
Are you an employer, or are you the HR resource for a firm?
Do you employ a workforce of more than two people?
Do you provide a pension scheme which you and/or your employees pay into, now or in the past?
If so, these new rules also apply to your company policy from 31 December 2022. All Group Pension Schemes must also meet these enhanced requirements. While you may not be the trustee for this scheme, you need to instruct your trustee how the rules are to be met.
These requirements will apply whether contributions are currently being paid into the pension or not. Therefore, as an employer or self-employed person, you need to take action now on engaging with and instructing the relevant parties about your pension. If you do not, you may be contacted by the Pensions Authority as the scheme will not be compliant with the new rules. Fines may be imposed for non-compliance.
Please note that personal pension arrangements such as Personal Pension Plans and PRSAs, are not in scope for the new rules.
But don’t worry! Help is at hand.
The new requirements are related to the Institutions for Occupational Retirement Provision (IORPsII) Directive, which came into force in April 2021. Due to the increased governance and cost of compliance introduced by IORPsII, employers who have a company pension plan will need to review their current pension arrangement and consider making their plan either IORPsII compliant or move to a Master Trust pension scheme or another pension arrangement such as a Personal Retirement Savings Account (PRSA).
As a result of this new legislation, there will be more demands placed on sponsoring employers and trustees of existing company pension plans, among which requirements to produce an annual report and audited accounts and significant additional costs will be incurred to ensure compliance with the requirements. From 1st of January 2023, the Pensions Authority will expect all sponsoring employers and trustees to be fully compliant with the new obligations under the amended legislation.
The Pensions Authority has recently stated that where trustees/sponsoring employer of a company pension plan make a formal commitment (notice of intent) by 31st December 2022 to wind-up the existing plan and the assets of the plan will be transferred to either a Master Trust or PRSA during 2023, trustees of existing pension schemes will not be required to meet the new IORPsII requirements for 1st January 2023 and will have some time (6 months for one-member schemes and 12 months for group schemes) to decide how to manage the scheme.
The first thing to do is contact your life office/pension provider or your broker.
They will be able to confirm who is the trustee on the pension scheme (whether you or someone else) and what steps you need to take to ensure you do not accidentally fail to meet the rules in time. All of the pension providers will have information on their websites and may also write to you directly.
Remember, action is needed now to avoid penalties.
Your pension provider is here to help and can support you throughout the process in terms of meeting your obligations. Check your pension provider’s website for contact details – most will also have more information on the rule change.
Provided by Insurance Ireland