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New Domestic Pension Regulations 18 November 2004 Tynwald recently approved the Retirement Benefits Schemes (Domestic Schemes)
(General Administration) Regulations 2004. These regulations, which are made
under the Retirement Benefits Schemes Act 2000, introduce the second phase of
the regulatory framework for Isle of Man domestic pension schemes and will take
full effect from May 2005.
The regulations are the result of a project to consolidate many areas of Manx
pension legislation, much of which has historically been adopted from the UK,
and bring the private pensions system into a regulated environment overseen by
the Isle of Man Government Insurance and Pensions
Authority ("IPA").
Extensive consultation
The regulatory framework is the result of extensive consultation with employers
and industry practitioners over a number of years, both on and off the Island,
and creates a framework appropriate to the needs of the Isle of Man. The new
domestic regulations complement the Island's existing international retirement
benefits schemes regulations, which took effect in January 2002, and under which
forty schemes for off-Island employees have so far been registered.
How will the new framework operate?
The new domestic regulations will affect every pension scheme established for
Isle of Man residents, requiring the trustees or administrator of the scheme to
register the arrangement with the IPA. This requirement to register schemes with
the IPA applies to all schemes whether they are managed by insurance companies,
professional pension scheme administrators, or are operated by employers as
'in-house' pension arrangements and operate regardless of whether the scheme is
tax approved by the Assessor of Income Tax. Certain relaxation do however apply,
particularly where local workers are participating in UK/Eire schemes where
regulatory oversight already exists.
New tracing service
The new framework also introduces a new and extended pension tracing service
which will be operated by the IPA. This free service will be available to any
scheme members who have lost contact with their scheme. The existing
registration requirements, and the associated annual levy charges, currently
operated by the DHSS, will no longer operate in relation to any scheme once
registered with the IPA.
A basic overview of the requirements
All schemes operating on the Island must seek registration with the IPA by May
2005. Registration will be either as a fully Authorised Scheme or as a
Recognised or Permitted Scheme.
Authorised Schemes:
- At least one scheme trustee must be independent of the employer, or the
scheme must have a qualifying proportion of member nominated trustees. - All
scheme trustees must be 'fit and proper'.
- The scheme administrator, responsible for the management of the scheme, must
be registered with the IPA as a registered schemes administrator.
- Annual return and accounts must be filed with the IPA within 6 months of the
end of each scheme year.
- Contribution payment and investment schedules will be required.
- Basic scheme information must continue to be issued to scheme members within
a set period of time after joining the scheme.
- Members must also continue to be regularly updated on key scheme/benefit
information.
Recognised Schemes:
- Occupational schemes established in the UK or Ireland that hold benefits for
Isle of Man resident members may not have to register as an Authorised scheme,
but as a minimum requirement must apply to the Supervisor for registration as a
Recognised Scheme.
- A person in the Isle of Man must be appointed for registration purposes.
Permitted Schemes:
- Other foreign occupational schemes which have a small number of Isle of Man
resident members (no more than 5) may approach the Supervisor for registration
as a Permitted Scheme.
- A person in the Isle of Man must be appointed for registration purposes.
Confidence
One of the objectives of the IPA in introducing this framework is to instil
uniform standards across the local pension and retirement planning system and to
ensure that all plans are managed appropriately. It is sympathetic with existing
private pension legislation, and should ensure that scheme members have better
access to information about their entitlements, and that existing statutory
requirements are complied with.
Consequently, it is envisaged that the new legislation should encourage people
to have more confidence in the Manx private pensions system, and will assist the
development of a positive long-term savings culture within the Island. Further
advice regarding the new requirements
Insurance companies and professional schemes administrators registered with the
IPA will already be aware of the new registration requirements.
Any Isle of Man based businesses, or the parent companies of Isle of Man
businesses, operating their own pension arrangements are advised to contact the
IPA, or to seek the advice of a pensions professional as to the new
authorisation requirements. Employers who have Isle of Man scheme members within
non Isle of Man based pension plans are likewise advised to discuss the
registration requirements with a local pensions professional, or the IPA, in
relation to possible alternative application for 'recognised' or 'permitted'
registration status. More stories >>>
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