The IORP II Directive (the “Directive”) has been a catalyst for the re-assessment of training and qualification requirements for the role of a pension scheme trustee. The Directive requires Member States to ensure that “persons who effectively run” a pension scheme (i.e. trustees) are “fit” and “proper”. The fit requirement necessitates that trustees have qualifications, knowledge and experience that is collectively adequate to allow them ensure sound and prudent management of the scheme, whereas the proper requirement necessitates that they be of good repute and integrity. The Directive has to be transposed into Irish law by 13 January 2019.
On 28 February 2018 the Government published its much anticipated pension reform agenda (“A Roadmap for Pensions Reform 2018-2023”) (the “Roadmap”). This gives some insight into how Irish legislation will likely interpret and apply the fit and proper requirements for Irish scheme trustees. Among the reforms proposed are the following measures:
- a set of new professional standards for trustees to meet the “fit” requirements;
- a requirement for a trustee board to have at least 2 trustees, and for a corporate trustee to have at least 2 directors:
- one trustee/director to have a mandatory trustee qualification; and
- the other trustee/director to have at least 2 years’ experience as a trustee;
- new standards for trustee professional development (including annual CPD requirements); and
- the Pensions Authority will be given power to remove a trustee who does not meet these new standards.
The term “collectively” was inserted into the “fit” requirements in the drafting of the Directive due to concerns about a total professionalisation of pension scheme trustees. Nonetheless the proposals will be a new standard for trustees to meet. This may lead to a reduction in the number of lay trustees taking up roles on trustee boards. The Roadmap commits to publishing draft legislation to transpose the Directive by 1 October 2018. This should provide more concrete detail so that trustees can prepare for the changes.
Contributed by Jane Barrett & Michael Wolfe.
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