The Gazette 1991

g a z e t t e

april

1991

Trusteeship and the Pensions Act 1990

Introduction What follows is a ganaral look at the Pensions Act 1990 from a trustee's point of view, without attempting to review the Act in detail. Before the passing of the Act, the activities of trustees in relation to schemes were governed by the Trustee Act 1893 and the provisions of the documents constituting the scheme and, in relation to the tax treatment of schemes, the Finance Acts of 1958, 1972 and 1974, the Income Tax Act 1967 and the Revenue Commissioners' practice thereunder. As a result of the passing of the Act, since the Act defines a trustee

inability to pay? What is "reasonable" will vary from s cheme to scheme. The Pensions Board may issue a guideline or a code of practice on this, as on other matters whe re the Act does not express spec i f ic require- ments. (b) To provide for the proper investment of the resources of the scheme in accordance w i th its rules. There is nothing to help the trustee in indicating what con- stitutes proper investment. To some extent his attitude, and that of practitioners advising him, will depend on whehter the fund is an insured or non- insured fund. If it is non- insured and management of a fund is delegated to particular firms or individuals then a trustee may expect that he would be regarded as owing a duty of care in his selection of the manager, if that function is open to him. A trustee should insist that management per- formance should be monitored and reviewed. In general, as long as a trustee ensures that the investment is in accord- ance w i t h t he s cheme 's constitution, he should have nothing to fear. It follows that trustees and practitioners should ensure that the rules of the scheme adequately pro- vide for investment and give the trustees clear directions and discretions. (c) Where appropriate, to arrange for payment of the benefits provided under the rules, as they become due. This is directed to ensuring that trustees arrange for the benefits actually to be paid. As w i t h t he i nves tment and management of funds, I doubt if it is sufficient for a trustee simply to ask someone else to make the payments without afterwards checking to see that the payment arrange-

Act, trustees will have to comply, in addition, w i th the specific requirements of the Act and of the numerous orders and regulations which will be made thereunder and may be affected by directions, orders, guidelines or codes of practice from, and inspections or investigations by, the Pensions Board. While the diligent and industrious trustee should have nothing to fear, nevertheless he will now need to devote much more t ime to his t r us t eesh ip t han heretofore in view of the extensive requirements to be observed. It appears that there may be practical d i f f i cu l t i es in imple- menting some aspects of the Act. In addition, since trustees and others involved will be dealing wi th new law, much of which probably " . . . one of the functions of the Pensions Bosrd will be to encoursge the treining of trustees." will develop on a day-to-day or case-by-case basis, I believe there will be a considerable need for a high degree of co - ope r a t i on between practitioners, trustees and the officials of the Pensions Board and of the Department of Social Welfare in the operation of the Act and t hat both solicitors and trustees will ease their burdens if particular care is given to the d r a f t i ng of pens i on scheme documentation. Appllcstion Some schemes are not established under the formality of a trust, but the persons responsible for admin- istering them will be bound by the

as including a person who is administrator of a scheme which is not established under a trust. The Act does not go so far as requiring trustees to have any particular qualification for acting as such, but one of the f unc t i ons of the Pensions Board will be to en- courage the training of trustees.

by Chetwode Hamilton, Solicitor

General duties By section 59, the Act imposes on scheme trustees general duties, wh i ch are expressly w i t h o ut prejudice to t r us t ees' du t i es generally and are in addition to any other requirements under the Act. These general duties are: (a) To ensure, so far as is reason- able, that the contributions payable by the employer, and the members where appropri- ate, are received. There is nothing to indicate how a trustee should ensure receipt of the contributions. If contributions are to be paid on a regular basis by specified dates, a trustee might issue a reminder if the relevant date passes without any contri- bution having been received. Should he insist that payment be made by standing order and/or that arrangements be put in place to deduct contributions from wages? What if the employer pleads

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