The Gazette 1991

g a z e t t e

april

1991

consider that additional provision should be made for increased administrative expenses as a result of the operation of the Act. This would mean increased funding wo u l d be required f r om t he employer. The Act requires trustees to prepare an annual report containing whatever information may be prescribed, on a yearly basis. This requirement is distinct from the requirement to have accounts audited, but may be compared to the directors' report to ac- company the audited accounts of companies. The drafting of the Act has resulted in a practical difficulty in relation to S.55 which imposes the requirement to produce the report. The explanatory memorandum published wi th the Bill as initiated i nd i ca t ed t hat dea th bene f it schemes and " f r ozen" schemes wou ld be exempt f r om t h is requirement, However, S.55 (2) (which expresses the exemption) is so wo r ded t hat it must be construed as meaning that a scheme will be.exempt only if it is at the same time both a death benefit scheme and a " f r ozen" scheme (as opposed to being in either one category or the other). Clearly this was an error in the drafting of the Act. The trustees are obliged by s.56(1) to have the accounts of a scheme audited (for periods as may be prescribed, but presumably on an annual basis), to have the scheme assets valued by the actuary and, in respect of the audit and valuation, to have specified documents prepared (the audited accounts, auditor's report and actuary's report). The documents are specified in sub-section (2). Then sub-section (6) exempts certain specified categories of scheme f r om sub-section (2). However, the practical difficulty is that sub-section (6) should have referred to sub-section (1). The result appears to be that the trustees of the scheme in question would still be obliged to have the accounts audited and the fund valued, but not obliged to have audited accounts, an auditors' report or an ac t ua r y 's report prepared. A f u r t her practical difficulty is that sub-section (6) suffers from the same drafting error as that in relation to s.55(2),

namely that it is so worded that it must be construed as meaning that a scheme will only be exempt if it falls within each (not any one of) of the categories specified in sub- section (6). Whiíe section 57 enables the Minister to modify the extent of the application of sections 54 (dis- closure of information), 55 (annual reports) and 56 (annual accounts and actuarial valuations) to certain schemes, it is doubtful whether it will be possible by regulation to correct the deficiencies in ss.55 and 56. Part III of the Act is devoted to the requirements on trustees to secure t he p r ese r va t i on of accumulated benefits for scheme members. Part IV introduces the requirement for all schemes, other . . . it is doubtful if it will be possible by regulation to correct the deficiencies in SS.55 and 56." than defined contribution schemes, to meet a funding standard, which will be evidenced by the provision of actuarial funding certificates which the trustees are obliged to procure and submit to the Board. There is not scope in this article to deal w i th these requirements in detail. Suffice it to say that the Act imposes extensive obligations on the trustees. However, compliance by the trustees inevitably will require co-operation between the employer conce r ned and t he actuary to ensure that all the requirements are complied w i th in good time. Despite the fact that failure to comply with these obliga- tions may not be the trustees' fault, nevertheless a trustee still faces the sanction of prosecution for failure to comply. The Act does not indicate that a trustee has any defence on the ground that matters were beyond his control. Equal treatment Part VII introduces the requirement to secure equal treatment for men and women in occupational benefit schemes. No move has been made to bring this part into operation yet. It remains to be seen precisely what impact the judgement of the European Court of Justice in May 1990 in Case C 262 / 88 Barber -v- Guardian Royal Exchange [1990] 2

All ER 660 will have on Irish pension schemes. Appointment and removal of trustees Under s.63, the High Court may appoint one or more trustees of a scheme in substitution for the existing trustees. This may be done only on application by the Board by petition and the court may make an order only if it considers that the trustees have failed to carry out the duties imposed on them by law (whether under the Act or not) and that the scheme is being or has been administered in such a manner as to jeopardise the rights and interests of members there- under. In addition to the powers conferred on the court, the Board may appoint new trustees, on the app l i ca t i on of any person interested. This power may be exercised only where there are no trustees or the trustees cannot be found and the Board considers it necessary to make the appoint- ment. The Act provides for the vesting of scheme assets in the new trustees following an appoint- ment. Where the assets are in registered form the new trustees should ensure that a copy of the order is produced to the relevant registrar. Conclusion The Act imposes numerous duties and obligations on pension scheme trustees, confers on them some rights and discretions and sets many different time limits wi th which they must comply. It is clear, therefore, that the life of such t r us t ees is going to become considerably more complicated. The indifferent trustee faces the possibility of criminal sanctions for his indifference. All trustees face a looming forest of possible inter- pretation difficulties and detailed compliance requirements. I believe that these can be met and most of the practical difficulties overcome with the co-operation of all involved in the establishment and admini- stration of pension schemes. However, I question whether all the anomalies that occur in the Act can be corrected merely by prescription or regulation. Against that back- ground, we all may expect a challenging future under the Act. •

8 0