184. Deputy Micheál Martin asked the Minister for Employment Affairs and Social Protection if she is satisfied that the trustees of a pension scheme (details supplied) have acted in the best interest of all beneficiaries and in particular the best interests of an association; and if she will make a statement on the matter. (Question 19232/18 asked on 02 May 2018)
Minister for Employment Affairs and Social Protection (Deputy Regina Doherty): I propose to take Questions Nos. 183 to 185, inclusive, together.
All dealings and decisions made by corporate or individual trustees of an occupational pension scheme are governed by legislation and enforced through the supervision of the Pensions Authority. The duties of a pension scheme trustee include administering a scheme in trust in accordance with the law and the terms of the trust deed and rules. Consequently, any decision made by corporate or individual trustees of an occupational pension scheme are governed by the relevant legislation and rules set out in the trust deed and the rules of the particular scheme. Trustees of pension schemes must act in the best financial interests of the scheme members and must serve all beneficiaries of the scheme impartially. If there is a conflict of interest then a person’s duty as a trustee must take precedence over other interests.
While current legislation does not specifically provide that member trustees must include at least one or more pensioner members (nor does it provide that member trustees must include one or more active members) it does provide an opportunity for such membership and pensioner members may avail of that opportunity to become scheme trustees or nominate others to act on their behalf.
The rules governing the role of trustees are regularly reviewed and enhanced. The Social Welfare and Pensions Act 2013 amended section 50 of the Act to broaden the options available to the trustees of a pension scheme when considering a restructure of scheme benefits. The restructuring of scheme benefits under section 50 of the Pensions Act must comply with the requirements of the Pensions Act and the criteria set out in statutory guidance. Before the trustees make an application to the Pensions Authority, they must consult with the employer, the scheme member, with pensioners and with the authorised trade union representing members. Trustees must undertake a comprehensive review of the scheme with a view to the long term stability and sustainability of the scheme. In advance of any application the trustees must notify all members of the scheme, including pensioners, in writing of :
- The circumstances giving rise to the proposed application and the reasons why the trustees believe an application is in compliance with their fiduciary duties,
- The proposed benefit reductions which are to apply to each category of member or other person and the reasons for treating one or more categories of member or other person differently to others,
- The fact that the trustees have requested additional contributions from the employers to avoid the necessity for a reduction in benefits and the response of the employers, and
- General examples of the projected impact of the reduction(s) on members using such assumptions as the actuary deems appropriate.
Members have 30 days to respond to the notification and their interests will be considered.
Measures were also introduced in 2015 to facilitate engagement between the trustees of a pension scheme and groups representing the interests of pensioner and deferred scheme members. Changes to guidance issued by the Pensions Authority require the trustees of a pension scheme to notify groups representing the interest of scheme members of proposals by the trustees of a defined benefit pension scheme to issue a direction under section 50 of the Pensions Act to restructure scheme benefits. This affords the representative group an opportunity to make a submission to the trustees of a pension scheme in relation to proposals to restructure scheme benefits. These changes facilitate engagement between groups representing the interests of pensioner and deferred scheme members and the Pension Authority and the trustees of a pension scheme. Consequently, I would expect that any group that is recognised for the purposes of collective representation with the trustees of a pension scheme could seek to engage voluntarily with the enterprise involved in talks or trade disputes with employees.
Last year the Pensions Authority carried out a public consultation process on proposals to impose higher standards for trustees. The transposition of the new EU Directive IORP II by January 2019 will also further advance the duties and supervision of trustees.
I hope this clarifies the matter for the Deputy.