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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
Deferred members - gone but not forgotten? - by Ms Peggy Hughes Partner at MASON HAYES & CURRAN
Irish Institute of Pensions Management
Volume 3 Issue 1
IRISH INSTITUTE OF PENSIONS MANAGEMENT
December 2012
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 coun-
try. 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 po-
tential 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 effective-
ly.
Current position
As we all know, when a scheme member terminates relevant employment and the indi-
vidual is entitled to a benefit under a pension scheme, that benefit is deferred until retire-
ment and may or may not be preserved under the terms of the Pensions Act 1990. 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 ad-
ministration of the benefits left behind can prove both difficult and costly.
Irish Institute of Pensions Management
Volume 3 Issue 1
IRISH INSTITUTE OF PENSIONS MANAGEMENT
December 2012
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 addition-
al 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 increas-
ingly, far exceeds the active scheme population in number and with whom they gradually lose contact. The scale of the diffi-
culties 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 is-
sues 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 pro-
gress 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.
Irish Institute of Pensions Management
Volume 3 Issue 1
IRISH INSTITUTE OF PENSIONS MANAGEMENT
December 2012
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 re-
nowned 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..
IIPM ANNUAL DINNER
Left: Mr Joe Bracken receiving
his AIIPM Certificate.
Right :Mr Jonathan Kerr receiv-
ing his AIIPM Certificate.
Left:Mr Martin
Condon presenting
flowers to the guest
speaker Ms Mary
Kenny.
Right:Mr Kieron
Knight receiving his
Fellowship ( FIIPM)
Certificate.
IRISH INSTITUTE OF PENSIONS MANAGEMENT
Page 4
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 maxi-
mum tax subsidised pension of €60,000 per annum will be intro-duced in 2014.
No change to the amount of the State Pension (€230.30 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 2014. ___________________________________________________________
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.
IRISH INSTITUTE OF PENSIONS MANAGEMENT
Page 5
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, As-sociates and Fellows. Please RSVP your answers to www.iipm.ie before 5.00pm on Thursday Decem-ber 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!
IRISH INSTITUTE OF PENSIONS MANAGEMENT
Page 6
Seminar IIPM/CPD Seminar Speaker Ms Rachael Ingle & Mr Eoghan Burns Date & Time January 31st 2013 at 5.30pm Venue National College of Ireland, IFSC, Mayor Street, D1. RSVP [email protected]
Dates for your dairy…. IIPM Seminars will also take place on the dates outlined below. The Topics & Speakers will be advised in early 2013. February 28th 2013. March 28th 2013. ___________________________________________________________________________________
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 2013 6.30– 8.30pm International Practice 12th Jan 2013 10-12pm Investments 14th Jan 2013 6.30– 8.30pm Retirement Benefits 16h Jan 2013 6.30– 8.30pm All exams will be held at NCI.
Upcoming Events 2013
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.
