New Deal independent trustee option Irish Life one-member company pension plans FAQ

The introduction of the trustee training requirement has led to an increased focus on trustee duties. Our trustee training workbook, which has been very well received, covers these duties and sets out how Irish Life helps trustees to meet these obligations. However, in some circumstances, for example where the employer and member are different people, the employer may not wish to act as trustee. Irish Life now offers the option of appointing an independent trustee company at no charge to the client – Irish Life will cover the cost until at least 2016.

Experience
An employer may not have any pensions or trustee experience in-house. Given the increasing legislative and regulatory requirements an employer may prefer to appoint a professional expert.

Transparency and autonomy
Potential conflicts of interest may arise where people, for example a life office, hold dual roles. Using a professional independent trustee ensures that the operation of a scheme is transparent, and can give the members peace of mind that their interests are being protected.

Full range of options
Appointing an independent trustee with Irish Life’s trustee option does not limit the investment choice. Clients have the benefit of the full range of investment options.

Irish Life are working with two independent trustee companies:

Independent Trustees Services (ITS)
ITS are part of the ITC Group, which has been trading since 1993. Headed by Aidan McLoughlin, they aim to provide a high-quality and professional independent trustee service. For more information see www.independent-trustee.com

Dedicated Trustee Services Ltd (DTS)
DTS is a corporate trustee company with the sole purpose of providing independent trustee services to Irish Pension Schemes. Headed by Rosemary Burke and Michael Hickey, their combined experience of over 30 years in pensions and law enables the provision of careful, practical and expert service. For more information see dtstrustees.ie

The trustee’s role is to oversee the pension scheme. They are required to act prudently and in the best financial interest of the beneficiaries. The trustee is also the legal owner of the assets.

The role of the trustee is separate to the role of the advisor. For example, the trustee will not give investment advice, this remains the role of the broker. It could be a conflict of interest to do both roles. Both independent trustees are committed to supporting you as the advisor by stressing the importance of the member taking financial advice.

While appointing an independent trustee removes all trustee duties from the employer, there are still some duties under the Pensions Act 1990 that remain the employer’s responsibility. In particular it is very important that contributions due are paid to the pension scheme. Amounts deducted from the employee’s salary/wages must be paid over to the pension scheme by the 21st of the following month.

The employer is responsible for passing on employee pension contributions in all circumstances. So if the employer acts as trustee, or if an independent trustee is appointed, or if the employer uses a PRSA scheme, the Pensions Act puts the same duty on the employer to pass on employee pension contributions by the 21st of the following month.

In addition the employer must provide employees with a statement, usually on the payslip, showing the employer and employee contributions paid in the previous month.

The employer should also keep us up to date on any changes to employer or member details.

The independent trustee can be selected on the company pension application form. Simply tick the box for the appropriate independent trustee on the letter of exchange on the application form. There are no additional forms to be completed and there is no need to contact the independent trustees directly.
If neither are selected then the employer will automatically become trustee.
The independent trustee will contact the employer and employee to confirm that they act as trustee.

The independent trustee can be selected on a Supplementary Letter of Exchange that is then signed by the employer and employee.

The Supplementary Letter of Exchange also asks for contact details such as member address and e-mail address to ensure that our records are up-to-date, and includes an endorsement to the scheme rules to cover the appointment and removal of trustees. The endorsement also confirms that the member can make the investment choice.
The independent trustee will contact the employer and employee to confirm that they act as trustee. The employer and employee give the instructions regarding the pension scheme, in accordance with the scheme rules. By completing the application form the employer is taking out the pension plan on behalf of the trustee, and the trustee will be the legal owner of the plan.

Investment choice
Investment decisions are made by the employee.
Confirmation of the fund choice can be given by the employee directly to Irish Life.

Contributions
Employer can decide how much it pays
Employee can decide how much AVCs to pay

So that the employer controls the payroll deduction process and controls how much is taken from its bank account, the employer must confirm all changes to contributions, such as increases, reductions, suspensions or changes in frequency.
Retirement claims and transfers

Retirement process stays the same. Employee can choose retirement options, e.g. spouse's pension, ARF v Annuity.
The employer will provide certain information, for example salary and service information to allow us to check Revenue maximum benefit limits. The employer must also confirm leaving service on early retirement.
The employer and employee will both sign the claim form to confirm the option selected and required information.
There is no need for the employer or employee to contact the independent trustee. Irish Life will work with the independent trustee to arrange its sign off as legal owner of the plan.

The only decision made directly by the trustee is on the payment of death in service benefits as outlined below.

On the death of a member while in service, the independent trustee will contact the personal representatives of the member and any other relevant people in order to determine who should receive the lump sum and any spouse’s/dependants pension payable.

The member can give the trustees a ‘letter of wishes’ at the commencement of the scheme. This is a written request from the member that benefits are paid in a certain way on death. The member can update the ‘letter of wishes’ at any time. While this request is not binding on the trustees, they will take it into account when deciding how benefits will be paid.

If the member dies after leaving service with the employer, having completed at least two years in the scheme, then in accordance with the Pensions Act 1990 the benefit must be paid to the estate of the deceased. It will then be for the personal representatives to distribute the benefit, either in accordance with the member’s will or in accordance with the terms of the Succession Act 1965.

Where an independent trustee is appointed, we have we have made some changes so that correspondence is issued to the most appropriate person.

You, as advisor, will continue to be copied in on correspondence in the same way as for company pensions where the employer acts as trustee.

New business documentation
Welcome pack will be issued by Irish Life to the employer.
Confirmation, including the original plan schedule, will be sent by Irish Life to the broker
In addition the Independent Trustee will send a welcome letter to the employer and employee, to confirm that they act as trustee.

Investment choice
As investment decisions are made by the employee, confirmation of fund switches will be sent directly to the employee.

Annual benefit statement
Irish Life will send the ABS directly to the employee.

Premium indexation letter
Irish Life will send this to the employer.

The employer should let the employee know if there will be any change to the amount deducted from the employee’s salary.

Unpaid contribution
The first notice regarding an unpaid contribution will be sent to the employer.

If contributions remain unpaid, a further notice of unpaid contributions will be issued to both the employer and employee. This will be after a second month of unpaid contributions for direct debit case, or 45 days after due date for cheque case.

Changes to contributions
Confirmation of changes to contributions will be sent to the employer and to the employee. This would include for example, increases, reductions, suspensions or changes of frequency.

The independent trustee will send a welcome letter to the employer and employee, to confirm that they act as trustee.

As the independent trustee is the legal owner of the pension plan, they may also need to become involved at certain other times for example,
• on the death of the member the independent trustee will contact the necessary people to determine who receives the death-in-service benefits
• if a Pension Adjustment Order is issued following the divorce or judicial separation of the member
• on a complaint involving the Pension Ombudsman or that involves the trustees internal disputes resolution procedure

If the independent trustees contact the member or employer at any stage they will copy you, as advisor, in correspondence

The employer has the power to appoint a new trustee at any stage. If this happens the independent trustee will write to the employer and employee to confirm that it no longer acts as trustee for the pension. If the independent trustee is removed, or resigns, the employer can appoint another independent trustee, or if the employer doesn’t appoint a new trustee then the employer will become trustee itself.