Pension trustee training - Aviva

Pension trustee training
A guide for trustees of Aviva Executive Schemes

This Guide has been produced by Aviva Life & Pensions Ireland Limited (“Aviva”) to assist in fulfilling trustee training
requirements under the Pensions Act 1990, as amended, for one-member executive schemes invested with Aviva.
This Guide is based on Aviva’s understanding of the relevant law, tax and Revenue practice as at November 2011.
Changes in law or practice may occur at any time. Future versions of this Guide will seek to reflect those changes as
and when practicable.
Due care has been taken to ensure that this Guide fulfils its purpose and to ensure the accuracy of the information
it contains. However, Aviva does not provide legal or tax advice or accept any responsibility for the Guide being
interpreted by the Pensions Board or otherwise as not fulfilling the trustee training requirements under the Pensions
Act. Also the Guide is intended to give general guidance on trusteeship and in case of doubt specific input should be
sought from Aviva or from professional advisers before making decisions.
© Copyright Aviva Life & Pensions Ireland Limited, November 2011.

l Trustee Training Guide
Contents
1. The need for training
2. Understanding pensions
3. Being a trustee
4. Trustee duties
5. Trustee procedures
6. Investment options
7. Member communication
8. The role of the Pensions Board
9. Summary of trustee duties and responsibilities
Trustee training declaration
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The need for training
1
This guide is for:
• Individuals who are trustees of an executive scheme invested with Aviva
of which there will only be one member i.e. the employee for whom the
employer established the scheme.
• Individuals who are directors of a company which is a trustee of an
executive scheme invested with Aviva of which there will only be one
member i.e. the employee for whom the employer established the
scheme.
• Individuals who may become such a trustee or director in the near future.
In most instances, the employer acts as trustee under the standard Letter
of Exchange and Rules for an executive scheme invested with Aviva.
Therefore for the most part we expect this Guide to be used by directors of
a corporate trustee. However for simplicity we refer to you as if you act in
your personal capacity as trustee. Where you are a director of a corporate
trustee, the trustee responsibility falls on the corporate entity, though of
course, a corporate entity can only fulfil its responsibilities through natural
persons, primarily its directors.
Aviva Executive Scheme
We refer for convenience hereafter to an executive scheme invested with
Aviva as an “Aviva Executive Scheme”.
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The need for training
The need for training
The Pensions Act 1990, as amended, (hereafter referred to as ‘the Pensions Act’) includes a
requirement for pension scheme trustees to undertake training. This requirement is effective
from 1 February 2010.
• New trustees, and new directors of a company acting as a trustee, appointed on or after
this date must complete training within six months of the date of their appointment and
every two years thereafter.
• Existing pension scheme trustees as at 1 February 2010, and directors of a company acting
as a trustee on that date, must complete training by 31 January 2012 and every two years
thereafter.
The level of training required is not outlined specifically by the legislation. It does state that the
training must be that which is deemed “appropriate” to the scheme in question. To assist you,
the Pensions Board have introduced an e-learning course for trustees that comprehensively
covers trusteeship for all types of pension schemes. This can be found on the Pensions Board
website: www.pensionsboard.ie.
Aviva has developed this Guide to assist towards fulfilling the trustee training needs for Aviva
Executive Schemes. Pensions can be a difficult and complex area. Your role as a trustee is very
important, therefore it is important that you as trustee, gain as much knowledge as you can
in order to fulfil your trustee role. When you finish reading the guide, you should sign the
declaration on page 34 and retain it for your records.
As you will see from reading this Guide, there are a number of functions that will be
performed by Aviva on your behalf. These areas will be displayed in a yellow box such as
this one.
Please note however that you still have ultimate responsibility for delivery of
these functions.
Additional Information
The Pensions Board website, www.pensionsboard.ie also contains a number of helpful
publications including:
• Trustee Handbook (3rd Edition), and
• The booklet “So You’re a Pension Scheme Trustee”.
We have highlighted where further information is available from the Pensions Board in a
light grey box such as this one.
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Understanding pensions
2
In this section we will cover:
• What is a pension scheme?
• Defined Contribution Scheme
• Are there tax advantages?
• Revenue Approval
• Trust Documents
What is a pension scheme?
Technically, an occupational pension scheme is an arrangement established
under trust by an employer to provide retirement benefits and/ or death
benefits for directors or employees of the employer. In terms of the financial
practicality, a pension scheme is a tax efficient way of saving for retirement.
An individual can, through becoming a member of a pension scheme,
seek to provide a retirement income via personal contributions and any
employer’s contributions.
Defined Contribution Scheme
An Aviva Executive Scheme is a “defined contribution” scheme. This means
that there is no defined or guaranteed level of retirement benefit; rather it
is the level of premium (or ‘contribution’) that is defined. The accumulated
value of the fund is used at retirement to provide retirement benefits in
respect of the sole member.
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Understanding pensions
Are there tax advantages?
An Aviva Executive Scheme is invested in a policy of assurance with Aviva where the returns are
linked to Aviva’s life assurance funds in much the same way as a regular savings plan. However
pension arrangements have a number of distinct advantages over other savings products. In
summary these are:
• employer contributions are tax deductible for corporation tax purposes;
• the member is entitled to income tax relief on their own contributions (up to certain limits set
out by the Revenue Commissioners);
• the money in the pension plan can grow tax free;
• there is an option to take part of the benefit as an immediate tax-free lump sum.
Revenue approval
The above advantages apply to an Aviva Executive Scheme by virtue of it being approved as
an “exempt approved” scheme by the Revenue Commissioners under the Taxes Consolidation
Act, 1997. In order to obtain Revenue approval, the pension scheme has to be established
under irrevocable trust through which the assets of the pension scheme are kept separate from
the assets of the employer. Once established, the scheme must comply with benefit limits,
contribution requirements and other requirements of the Revenue Commissioners. The scheme
is also subject to the general body of law relating to trusts, the specific terms of the trust
documents under which the scheme is established and the Pensions Act.
Trust documents
The formal trust documents governing an Aviva Executive Scheme are a Letter of Exchange
and Rules. The Letter of Exchange establishing the scheme is incorporated into the Aviva policy
application form and is signed by the employer and the employee/member when completing
the application form. The Rules adopted by the Letter of Exchange are, unless a variation was
sought, the standard Rules for an Aviva Executive Scheme produced by Aviva.
As referred to in a number of places throughout this Guide, the Letter of Exchange and
Rules are your primary reference documents when carrying out your trustee duties.
The Rules may vary from scheme to scheme. It is important therefore that you have
regard to the specific Rules of your scheme when making decisions as a trustee.
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Being a trustee
3
In
this section, we introduce you to the basic
concepts of trusteeship, who can be a trustee
and if any particular skills are required.
This will cover:
• What is a Trust?
• Who can be a Trustee?
• Do you need investment skills?
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Being a trustee
What is a trust?
A trust is an arrangement under which a person or group of people undertake to hold assets on
behalf of others. The people who hold the assets are the trustees, and they are the legal owners
of the assets. In the case of an Aviva Executive Scheme, the trustees hold the assets of the
scheme in trust for the benefit of the sole member of the scheme and their spouse/dependants
(if applicable).
There are four features of trusts to which the Pensions Board draw attention in relation to
pension schemes:
1
The scheme funds must be separate from the employer’s business. For example, the
scheme’s bank account should be a separate bank account from the one used for
the employer’s normal business.
2
The Letter of Exchange and Rules set down how the scheme is to be administered and
member’s benefits calculated, which must be in accordance with the Pensions Act.
3
Trustees have a duty to act in the best interests of the beneficiaries.
4
The beneficiaries can enforce the trust even though they are not involved in the
creation of the trust. (The Aviva Executive Scheme is an exception to the norm in
that the sole member is a party to the document establishing the trust i.e. the Letter
of Exchange.)
Who can be a trustee?
For a scheme established by Letter of Exchange the sole trustee is usually the employer.
You cannot act as trustee if:
››
You are an undischarged bankrupt;
››
You have undischarged obligations under compositions or arrangements made with
creditors;
››
You have ever been convicted of an offence involving dishonesty or fraud
››
You have been banned from becoming involved in the formation of a company for a
period of time.
Also, a company, any of whose directors that are prohibited from acting as trustees based on
the provisions referred to above, cannot act as trustee.
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Being a trustee
Do you need investment skills?
As a trustee you are not expected to be an expert on investments. However, if you do not have
investment expertise yourself, you should seek the advice from an adviser authorised to give
investment advice. It may be that the insurance intermediary with whom the decision was made
to invest with Aviva acts as investment adviser. We deal more fully in later sections of this Guide
with your investment duties.
Information on the investment funds available from Aviva (to
which your policy may be linked) will form part of the Aviva
pre-contract/marketing material provided to you. These funds
may be managed by Aviva and a range of third party fund
managers.
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Trustee duties
4
In this section, we will look at the numerous
responsibilities and duties of a trustee of an
Aviva Executive Scheme in a bit more detail.
Please remember however, you won’t be called
on to exercise all of them at the same time and
Aviva are there to support you in a number of
instances.
This will cover:
• Basic Trustee Duty
• Common Law Duties
• Pensions Act Duties
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Trustee duties
Basic trustee duty
The basic obligation is to carry out the terms of the trust according to the law and the trust
documents (Letter of Exchange and Rules in the case of an Aviva Executive Scheme) having
regard to the interests of the beneficiaries as a whole. When running the scheme the trustee
must exercise reasonable care. The test is that the trustee would take the precautions that an
ordinary prudent man of business would take in managing similar affairs of his own.
However please note the variation on this in respect of the duty of investment where the Irish
courts have referred to:
“In exercising his discretion, a trustee must act honestly and must use as much diligence
as a prudent man of business would exercise in dealing with his own private affairs; in
selecting an investment a trustee must take as much care as a prudent man would
take in making an investment for the benefit of persons for whom he felt
morally bound to provide.”*
Common law duties
There are a number of duties imposed on trustees under the general law on trusts developed
through the decisions of the courts. These:
1
Have been given statutory backing (e.g. duty to pay benefits, duty of notification)
under the Pensions Act and so are dealt with under the next heading (Pensions
Act Duties) and/or;
2
Are dealt with separately (e.g. duty of confidentiality, duty to invest) in Section 5
(Trustee Procedures) and Section 6 (Investment Options).
Pensions Act Duties
The Pensions Act and Regulations made under the Act impose a number of statutory duties on
trustees. We summarise them below.
To Register the Scheme
This involves registering the scheme with the
Pensions Board and payment of the annual fee.
*Source: Stacey v. Branch (1995) 2 ILRM 136.
In practice Aviva will make the
arrangements for registration and
payment of the fee on your behalf.
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Trustee duties
To Appoint a Registered Administrator
A registered administrator will undertake to perform specified administrative functions on behalf
of the trustee. The current duties of registered administrators as outlined under the Pensions Act
can be summarised as:
(a) Preparing an annual report for delivery to the trustees within a prescribed timeframe
dovetailing with the obligations of the trustees under the Disclosure Regulations
(b) Preparing and delivering to the trustees an annual
benefit statement for the member.
The registered administrator of your scheme is
Aviva, unless you have notified us otherwise.
To Comply with the Disclosure of
Information Requirements
Part V of the Pensions Act and Regulations made under the Act require trustees to ensure that
the necessary arrangements are in place for the disclosure to members, prospective members,
their spouses, other scheme beneficiaries and authorised trade unions which represent
members, of details about the constitution and rules of
the scheme, certain basic information about the scheme
and details of an individual’s benefit entitlements under
the scheme. See Section 7 of this Guide where Member
Communication is addressed in more detail. Please also see
the summary table of documentation on page 33 of this
Guide.
Aviva will prepare and/or
assist in preparing the relevant
documents and information on
your behalf.
To ensure that Contributions are Received
The trustee must ensure that the contributions are paid to the scheme on the due date.
Under the Pensions Act, the employer must pay the employee contributions and any employer
contributions to the trustees within 21 days of the end of the month (in which they have
been deducted in the case of employee contributions or in which they were due in the case
of employer contributions). An employer who deducts contributions from an employee must
give a statement at least once a month in respect of the employee and employer contribution
paid to the scheme, and this requirement is usually covered within the employee’s payslip.
The contributions will be collected by Aviva by direct debit (monthly or yearly contributions) or
cheque (single or yearly contributions).
The Pensions Board has produced an informative Frequently Asked Questions (FAQ)
document which includes a section on the remittance of contributions. This is available on
their website at www.pensionsboard.ie.
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Trustee duties
To Invest the Funds
We have tried to avoid too much legal jargon in this Guide. However in the significant area of
investment, it is appropriate to introduce the investment duty and statutory parameters to you
in broad terms. We deal with the application of these to the investment options under an Aviva
Executive Scheme in Section 6.
Under the Pensions Act itself, the trustees must provide for the proper investment of the
resources of the scheme in accordance with its Rules and insofar as is reasonable, the trustees
must ensure that the contributions are invested within 10 days of the latest date for payment by
the employer.
The relevant Investment Regulations under the Pensions Act are the Occupational Pension Schemes
(Investment) Regulations, 2006 (S.I. No. 294 of 2006). Some of the regulations merely flesh out what
would normally be understood by the trustees’ duty to invest prudently and, for example, to avoid
“excessive risk”. With certain exceptions in the case of specific types of schemes, the regulations
also introduced restrictions on borrowing and the use of derivative instruments by schemes and
require that the assets of the scheme must be invested “predominantly” on regulated markets i.e.
more than 50% of the assets must be on regulated markets.
The Pensions Board have produced a Frequently Asked Questions document on the
Investment Regulations that includes specific reference to their application to policies
linked to insurance funds. This is available on their website www.pensionsboard.ie.
To Make Arrangements for Paying the Benefits
Payment of retirement benefits to the member will take place in accordance with the Rules. The
occasions that result in the payment of benefits are retirement at or before normal pensionable
age, death and leaving service. Your duty as trustee is to make sure that the beneficiaries are
paid correctly and as soon as possible. The Rules of your scheme should
provide whether the trustees or the member decide which benefits from
the available options are chosen on retirement.
(See also under “Exercise Discretion” at Section 5 in relation to death
benefits.)
Aviva will implement
the chosen benefits on
the instructions of the
trustees
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Trustee duties
To Preserve or Transfer Benefits:
Benefits don’t just come into play when a member retires.
Trustees must make the relevant arrangements if the member
leaves the scheme and/or the employer, to ensure that their
benefits are transferred to another scheme or preserved until
retirement. Also, you may have to accept transfers into your
scheme on occasion where the member has an entitlement under
another pension arrangement.
Aviva will provide assistance
in addressing the preserved
benefits requirements
and prepare an options
letter for a member who
leaves employment before
retirement.
The Pensions Board have produced Guidance Notes on Preservation of Benefits. Also the
rules relating to preservation and transfer of benefits are summarised in the Pensions Board’s
booklet What Happens To My Pension If I Leave? These are available on their website
www.pensionsboard.ie.
To implement Pension Adjustment Orders
We address this in Section 7 (Member Communication).
To ensure that Records are kept:
As a general statement you should, as a trustee, ensure that accurate and complete
membership and financial records are kept in relation to the scheme. Also you should ensure
that arrangements are in place for complete and up-to-date membership records to be kept to
enable benefits to be calculated.
While ultimate responsibility for record keeping rests with the trustees, as a general statement,
the record keeping function is divided between:
1
Trustee Records comprising of copies of documents and communications from Aviva
or other sources (such as the insurance intermediary), minutes of meetings and any
financial records outside of the policy (e.g. the separate trustee bank account) kept
by you (or somebody other than Aviva on your behalf).
2
Administration Records comprising of the membership and administration records
forming part of the policy kept by Aviva on your behalf.
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Trustee duties
To apply the Resources of the Scheme on Wind-Up
If the scheme is being wound up, you as trustee, have a duty
to ensure that the member’s pension rights are preserved
and that the wind up takes place without unnecessary delay.
Depending on the circumstances of the winding-up, you may
also need to take independent legal advice.
Aviva will be able to give some
guidance in relation to the operation
of the Rules for an Aviva Executive
Scheme on winding-up.
To undertake Trustee Training
This has been included as one of the trustee duties under
the Pensions Act.
The purpose of this Guide
is to assist you to fulfil your
trustee training requirements
under the Pensions Act as a
trustee of an Aviva Executive
Scheme.
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Trustee procedures
5
In this section we will cover:
• Delegation
• Trustee Decision Making
• Exercise Discretion
• Liability
• Meetings
• Complaints & Whistleblowing
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Trustee procedures
Delegation
It is your responsibility as trustee to ensure that you are exercising proper care in the
administration of the trust. Therefore it is essential that you make the right decision when
selecting a person or organisation to whom to delegate functions and police that the delegated
function is carried out.
Aviva supports you as trustee of an Aviva Executive Scheme in many of your duties;
below are a number of specific functions that we will carry out for you:
››
Register the scheme with the Pensions Board at inception.
››
Carry out checks to make sure that contributions are within Revenue limits at inception or
in the event of top-ups to the policy.
››
Keep records for the member of all contributions received and benefits paid.
››
Issue the required information on retirement, death or leaving service options once advised
of the occurrence of one of these events.
››
Assist with the establishment of benefits when benefits become payable.
››
Act as the Registered Administrator of the scheme and maintain accurate and sufficient
records to produce the annual benefit statement and statement of reasonable projection.
(Please note that, although we mention annual reports elsewhere in this guide, in the
case of an Aviva Executive Scheme, we utilise an exception under the Pensions Act which
dispenses with the requirement for an annual report).
››
Prepare the annual benefit statement and the statement of reasonable projection.
››
Payment to the Pensions Board of the annual Pensions Board fee.
Trustee decision making
There are a number of principles to which trustees should adhere when making decisions that
affect the trust. In summary, the main principles are:
• Reference to the Trust Documents - It might seem obvious to say, but your first responsibility
is to administer the trust in accordance with the provisions of the Letter of Exchange and Rules,
which should be your first port of call when required to make decisions. If you fail to act in
accordance with the Letter of Exchange and Rules, you may be committing a breach of trust
and could, in some instances, be open to prosecution by the Pensions Board.
• Act in the best Interests of the Beneficiaries - A trustee’s key obligation is to the
beneficiaries of the trust, and any decisions made must have the beneficiaries’ best interests
in mind. The beneficiaries are the persons in respect of whom benefits are to be provided by
the scheme – the principle beneficiary of the scheme being the member but there are also
contingent beneficiaries such as the member’s spouse, children or other dependants.
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Trustee procedures
• Fairness Between Beneficiaries - Always bear in mind the interests of each beneficiary
or group of beneficiaries. This may be relevant in the case of an Aviva Executive Scheme, to
decisions involving a potential conflict between the interests of the primary beneficiary (the
member) and contingent beneficiaries such as spouse, children or dependants.
• Act Prudently – This is most important when making investment decisions – see sections 4
and 6.
• Relevant Factors – In the exercise of your discretion as a trustee you need to take all
relevant factors into account and not take irrelevant factors into account.
• Seek Professional Advice – Pensions law is complex. There will be a number of occasions
when, understandably, you may not have the ability or information to make a decision due
to a lack of expertise. On these occasions, advice should be sought from external advisers;
for example, unless the trustees are qualified Financial Brokers, they should not advise the
member about their investments.
• Be aware of Conflicts of Interests – You need to be vigilant for potential conflicts of
interest between your own personal interests and your duty as a trustee or between your
role as director/executive of the employer and your duty as a trustee. The Pensions Board
Trustee handbook states that your “duty as a trustee must prevail when taking decisions”.
• The Importance of Confidentiality – As a trustee, you may from time to time be party to
sensitive information relevant to the scheme, its beneficiaries, or the employer. It should, of
course, go without saying that any information acquired in your capacity as a trustee must
be treated with the utmost confidentiality. You should keep information confidential about
the workings of the business and affairs of the employer and the members.
Exercise discretion
Various discretions will be vested in you as trustee under the Rules for an Aviva Executive
Scheme. These may include discretions in relation to benefit payments, which are touched on
in relation to making arrangements to pay retirement benefits at Section 4 (Trustee Duties).
Also there may be a residual discretion vested in the trustees
to determine matters of doubt under the Rules. When the
circumstances call on the exercise of trustee discretion then
it is important that the trustee gives due consideration to the
exercise of that discretion. The principles outlined on trustee
decision making above are relevant to decisions in relation to
the exercise of your discretion as a trustee.
It is likely that in all but the most
straightforward cases you would look
for support from Aviva and/or seek
professional advice in the exercise of
this significant discretion.
A potentially significant exercise of trustee discretion could
occur in the event of the death of the member before
retirement. Commonly under the Rules the discretion is vested in the trustees as to who among
a broad category of beneficiaries or the member’s estate are to benefit.
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Trustee procedures
The benefit could comprise a return of fund from an investment policy and an insured amount
of benefit, sometimes comprising a multiple of the member’s salary. The key is to check particular
parameters laid down by the Rules of your scheme and identify the relevant potential recipients.
Liability to capital acquisitions tax may
arise depending on whom among the
potential recipients you decide to pay.
The Pensions Board’s Trustee Handbook (3rd Edition) gives
guidance with regard to the exercise of this discretion.
Liability
The focus of this Guide is on the discharge of your responsibilities as trustee. You may however
be concerned about your personal liability if something goes wrong. We have set out below
the position regarding liability in very general terms. Personal liability of trustees is a complex
area and specific legal advice should be sought if you have concerns around any particular
decisions.
In very general terms, the Trustee Act, 1893 provides a trustee is answerable only for his/her
own acts, neglects or defaults and not for those of any other trustee or other person. However,
inactivity on the part of a trustee when he/she ought to have intervened may be regarded as
sufficient to impose liability on the trustee. You should not “turn a blind eye” to the activities
of your co-trustees or others engaged in the administration of the trust.
The Rules of the scheme might also include protection for the trustees by way of exclusion of
liability and/or indemnity from the employer except in the case of wilful default or (in the case
of a professional trustee) negligence. However, these protections would not traditionally have
been included in one-member executive schemes so please check your particular Rules.
Meetings
The expectation in the case of Aviva Executive schemes is that the trustee will be the employer
who will be a limited company. Meetings of the directors of a company will be governed by
its Memorandum and Articles of Association. If not, you may need to take advice on meeting
procedures to include whether decisions must be unanimous.
The Pensions Board’s Trustee Handbook (3rd edition) acknowledges that the size and
complexity of the scheme may be factors in deciding how often trustees need to meet. It states
that as an absolute minimum trustees should meet once a year, as soon after the scheme yearend
as is feasible, to consider and approve the scheme’s annual report and any other issues
then arising. Also items such as the exercise of a discretionary power following the death of the
member could require a meeting to be called for a specific purpose.
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Trustee procedures
Complaints and whistleblowing
Under the Pensions Act, trustees are required to have an internal disputed resolultion
procedure in place to deal with certain complaints. The Pensions Ombudsman may investigate
and determine complaints made, in writing, by or on behalf of an “actual or potential
beneficiary” of a scheme involving:
(a) claims for financial loss as a result of maladministration on the part of those responsible for
the management of the scheme;
(b) any dispute, whether of fact or law, which arises in respect of an act or omission of those
responsible for the management of the scheme.
It is also a duty of the trustee to make a report to the Pensions Board if you have reasonable
cause to believe that a material misappropriation or fraudulent conversion of scheme assets
has occurred or is due to occur. This is known as “whistleblowing”. Such a report must be
issued to the Pensions Board without delay. A significant focus of the Pensions Board in this
area relates to the non-remittance of contributions. In this context you should be aware that
Aviva reserves the right to advise the Pensions Board if we have reason to believe that the
contributions due are not paid within the required time period.
The Pensions Board’s Trustee Handbook (3rd Edition) advises trustees on the implementation
of complaint handling procedures. The Pensions Board have issued Guidance Notes on
Compulsory and Voluntary reporting to the Pensions Board. These are available on their
website: www.pensionsboard.ie
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Investment options
6
We summarised the trustee investment duty in
Section 4. In this section we are seeking to give
you guidance in applying the general principles
to an Aviva Executive Scheme with particular
focus on member investment choice.
This will cover:
• Application to an Aviva Executive Scheme
• If member Choice applies
• If no member Choice applies
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Investment options
Application to an Aviva Executive Scheme
Apart from any bank account operated by the
trustee, under an Aviva Executive Scheme, the
investments of the scheme are comprised of
policies of assurance with Aviva. Typically the
value of the investment policy derives from the
value of the underlying Aviva Life & Pensions
funds to which the policy is linked. Aviva provide
a range of fund options to which the policy can
be linked.
Two scenarios arise in relation to the exercise of
investment options.
Aviva has produced a Fund Guide that
explains investment styles, the importance
of diversification and contains information
on all of the available funds. In addition
Aviva produce monthly fact sheets on
each fund and our online Fund Centre
allows you and the member to track the
unit prices of the chosen funds. These are
available on www.aviva.ie
1
The standard Rules for Aviva Executive Schemes established since January 2010
provide that the fund choices under the Aviva policy can be passed on to the
member.
2
Unless specifically amended, the standard Rules for Aviva Executive Schemes
established before January 2010 do not provide for the fund choices to be passed
on to the member.
If you want to upgrade the Rules of your scheme by way of amendment to allow member
investment choice, please contact us. Aviva may be able to provide a standard form of
amendment for adoption in accordance with your Rules.
If member choice applies
Under the current standard Rules for an Aviva Executive Scheme established since January
2010, if the employer allows under the Rules, the member may, subject to and in accordance
with the determinations of the trustee, direct the exercise of the fund choices under the Aviva
policy. In default of direction from the member, the trustees should make the choices or invest
in accordance with a default option chosen by the trustees and notified to the member.
As trustee you are responsible for the operation of the Member investment choice
arrangement under the Rules and for compliance by that arrangement with the provisions of
the Pensions Act to include (without limitation) the Disclosure Regulations and the Investment
Regulations.
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Investment options
Points of Action
The practical interaction between the member investment choice arrangement and your
dealings with Aviva mean a number of points of action for you with regard to investment
decision making:
• The trustees must in accordance with the Rules determine the parameters within which
the member may exercise investment options available. Article 6(3) of the Investment
Regulations refers to investment being appropriate having regard to the nature and duration
of expected liabilities of the scheme. It would be prudent to assume that the trustees should
ensure the investment choices given to the members are appropriate.
• The trustees must ensure that the member has sufficient information about the investment
options available under the Scheme – see reference to Fund Guide and Fund Centre
previously. Also, the current standard Member’s Explanatory Booklet for an Aviva Executive
Scheme provides information on the exercise of member choice under the current standard
Rules for an Aviva Executive Scheme.
• If the member has chosen the funds themselves the trustees must advise Aviva of the fund
choices.
• If the member opts not to choose the funds themselves, then the trustees must make the
fund choices on behalf of the member or invest in accordance with a default option chosen
by the trustees and notified to the member. Again the trustee must advise Aviva of the fund
choices.
In all instances, we can only accept the investment instructions in writing from you, the trustee.
If no member choice applies
Unless specifically amended, the standard Rules for Aviva Executive Schemes established before
January 2010 do not provide for the fund choices to be passed on to the member. In such
instances, the trustees must
• Make the fund choices themselves.
• Advise Aviva of the fund choices.
In all instances, we can only accept the investment instructions in writing from you, the trustee.
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Member communication
7
The provision of information is a very important
trustee duty under the Pensions Act. There are a
number of pieces of documentation which form
part of the disclosure requirements.
In this section we will cover:
››
Governing trust documentation
››
Basic information
››
Annual benefit statement
››
The member leaves the scheme
››
The death of the member
››
The retirement of the member
››
Pension adjustment orders
››
Winding up of the scheme
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Member communication
Governing trust documentation
The Letter of Exchange and Rules governing an Aviva Executive Scheme must be available
for inspection at all times. If the member, their spouse, other beneficiaries (or trade union
representatives) ask for copies of these documents, you must provide them within a maximum
of four weeks.
Basic information
Within two months of joining the scheme,
the member must be provided with a Benefit
Statement and certain basic information
about the operation of the scheme.
Aviva prepare the Benefit Statements on your behalf
and we also produce a standard explanatory booklet
on the operation of an Aviva Executive Scheme.
Aviva can also provide a copy of the explanatory
booklet or a Benefit Statement at any time after this
upon request.
Annual benefit statement
As a trustee, it is your legal responsibility to have an Annual
Benefit Statement prepared and issued to the member at least
once in every scheme year. The Annual Benefit Statement will
include a Statement of Reasonable Projection (SORP), which will
show the member a projection of their retirement benefits at
retirement age.
The Annual benefit Statement
is prepared by Aviva on your
behalf. It is your responsibility to
forward this on to the member.
The member leaves the scheme
When a member leaves the scheme (whether or not
to be employed elsewhere) a written statement is to
Aviva will prepare the relevant information
be provided, containing information about their rights
for the member on your behalf. It is your
(including a transfer of benefits to a new employer’s
responsibility to forward this on to the member.
scheme or their right to preserve the benefits or any
entitlement to a refund of contributions). This must
include a valuation of their benefits, any liability to income tax and the dates (if applicable) by
which the member must exercise the available options.
The death of the member
In the event of the death of the member before
retirement, as trustee you must, where a benefit
becomes (or is about to become) payable, provide
the spouse or other beneficiary with a written
statement of the benefits and options available.
Aviva will prepare the relevant
information on your behalf. It is your
responsibility to forward this on to
the beneficiary.
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Member communication
The Retirement of the Member
If a member retires at normal retirement age, you
must provide them with a statement of benefits
due. If they retire earlier or later than their normal
retirement age, they must be provided with a
statement of how their benefits may be affected by
this change, and any options they are entitled to
exercise.
Aviva will prepare the relevant
information for the member on your
behalf. It is your responsibility to
forward this on to the member.
Pension Adjustment Orders
The Family Law Act, 1995 and the Family Law (Divorce) Act, 1996 give the courts power, on
judicial separation or divorce, to issue pension adjustment orders overriding the rules of a
scheme and giving entitlement in respect of a member’s benefits under the scheme to a spouse
and other dependants.
In the event of a pension adjustment order being issued in respect of a scheme, the trustees are
obliged to implement the order and provide information on
the impact on scheme benefits to the relevant parties.
You should immediately forward to Aviva any notification
received by you of a pension adjustment order in relation to
the Aviva Executive Scheme. Aviva will implement all valid
pension adjustment orders on behalf of the trustees.
Aviva will issue information for the
relevant parties on the impact of a
pension adjustment order on the
scheme benefits.
The impact of the Family Law Acts on pension schemes is complex. The Pensions Board
have a booklet available called “A Brief Guide to the Pension Provisions of the Family Law
Acts” which is available on their website: www.pensionsboard.ie
Winding up of the scheme
If the scheme is to be wound up, the trustee must:
››
Communicate this information to the member, other beneficiaries and trade union
representives as soon as possible but in any event, no later than twelve weeks after the
decision to wind up has been made or the trustee becomes aware of such a decision.
››
Inform the member, and other beneficiaries of their rights.
››
Detail any options that the member, and any other beneficiaries may be able to exercise.
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The role of the Pensions Board
8
In this section we will cover:
››
The functions of the Pensions Board
››
Powers of the Pension Board
››
Pension Board Audits
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The role of the Pensions Board
The function of the Pensions Board
The Pensions Board was established under the Pensions Act and has a number of functions,
some of which are outlined below:
››
To monitor and supervise the operation of the Pensions Act and pension developments
generally.
››
To advise the Minister for Social Protection on all matters relating to the functions
assigned to the Board under the Pensions Act
››
To issue guidance notes on the duties and responsibilities of trustees of occupational
pension schemes
››
To encourage the provision of appropriate training for the trustees of occupational
pension schemes
Powers of the Pensions Board
The Pensions Board has wide powers in respect of pension schemes which includes but is not
limited to:
• Taking Court proceedings against trustees and/or an employer for non-compliance with the
Pensions Act; penalties on conviction include fines and/or imprisonment
• Applying to Court to have trustees suspended or removed
• As an alternative to taking Court action, issuing on-the-spot fines for certain offences.
The Pensions Board has produced a checklist document detailing these fines. This is available
from their website www.pensionsboard.ie
Pension Board Audits
The Pensions Board may ask for specific information about the scheme at any time. A letter
is issued to the trustees of a scheme requesting that they furnish to the Board specific
information and/or documentation within a specified timeframe. As a trustee, you are required
by law to provide this information, within a specified period. On receipt of the documentation
and information requested, the Pensions Board checks compliance of the content of the
documentation and whether the documents have been made available within the statutory
deadlines.
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Summary of trustee duties and responsibilities
9
• Summary of the more important duties and responsibilities for you as a
trustee
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Summary of trustee duties and responsibilities
Responsibilities
Carried out by
Carried out
Carried out by
Aviva on your
by Aviva
you
behalf with
Independently
information
supplied by you
Submission of scheme details to Revenue
Commissioners for Approval
4
Registration of scheme with the Pensions
Board
4
Members Explanatory Booklet 4*
Information on leaving scheme/
employment, death, retirement or
scheme wind-up
4*
Statement of Reasonable Projection,
required on request or on leaving service
4*
Annual Benefit Statement 4*
Compulsory and Voluntary Reporting to
the Pensions Board
4 4
Payment of the annual Pension Board
fee
4
Payment of Contributions 4
Record Keeping 4 4
Make and/or transmit Investment
Choices
4
Delegate Functions 4
Exercise Discretions 4
Hold trustee meetings 4
Implement Pension Adjustment Orders 4 4
Complete trustee training 4
*Prepared by Aviva for you to provide to the member
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Trustee training declaration
Now that you have studied this Guide, please complete the declaration below and retain it for your records.
Please Note that your training must be completed every two years, and the fact of the completion of this
training recorded in the minutes of any board/ trustee meeting.
Keep this Guide handy as you may need to refer to it again.
Trustee training declaration
We confirm that we have read and understood the contents of the Pension Trustee Training Guide for
Trustees of Aviva Executive Schemes
NAME OF DIRECTOR SIGNATURE DATE
1.
2.
3.
4.
yes
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Further Training Support:
As well as publishing their Trustee Handbook (3rd edition), the Pensions Board also
produce numerous documents that serve to help you in your role as trustee. One booklet
called “So you’re a Pension Scheme Trustee?” provides a helpful introduction for newly
appointed trustees. Their website www.pensionsboard.ie contains a list of “Frequently
Asked Questions” which cover a wide range of common pension queries and Guidance
Notes on a number of topics.
Aviva will continue to support you in your role as Trustee by:
• Investing all funds in a timely manner as instructed by you.
• Preparing member communications as required (outlined in section 7 of this Guide).
• Ensuring that all benefits are established correctly as instructed by you.
• Providing full profiles for all of our investment funds for you and/or the member to make
investment decisions in conjunction with your/the member’s Financial Broker. When you
need further information on any of our funds contact Aviva directly, or your Financial Broker
or alternatively log onto our fund centre at www.aviva.ie
• Helping you towards the fulfilment of your trustee training requirement with the publication
of this Guide.
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notes
• teles
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Aviva Life & Pensions Ireland Limited Registered in Ireland No. 252737
Registered Office: One Park Place, Hatch Street, Dublin 2. Member of the Irish Insurance Federation.
Aviva Life & Pensions Ireland Limited is regulated by the Central Bank of Ireland.
Life & Pensions One Park Place, Hatch Street, Dublin 2. Phone (01) 898 7000
Fax (01) 898 7329
www.aviva.ie
Telephone calls may be recorded for quality and training purposes.
3.177.02.13