The Occupational Pension Schemes (Charges and Governance) Regulations (Northern Ireland) 2015

Explanatory Note

(This note is not part of the Regulations)

These Regulations impose obligations on trustees and managers of certain occupational pension schemes in relation to charges imposed by and governance of those schemes. They are the first regulations to be made under Schedule 18 to the Pensions Act (Northern Ireland) 2015 (“the 2015 Act”).

Part 1 contains interpretation provisions including definitions of “relevant scheme” (regulation 2) and “default arrangement” (regulation 3).

Part 2 contains restrictions on charges imposed on members of relevant schemes. With the exception of regulation 11 (non-contributing members), these restrictions apply to members with rights in the default arrangement of a relevant scheme.

Regulations 4 to 6 impose limits on the charges which can be imposed and prohibit certain charges. Regulations 7 and 8 provide alternative ways of assessing the charges imposed on a member.

Regulation 9 provides for a member to agree that services provided will not be covered by the provisions of these Regulations as long as certain conditions are met.

Regulation 10 allows trustees and managers to take action in relation to a default arrangement where, despite their best endeavours, they are unlikely to be able to comply with the charge limits.

Regulation 11 prohibits trustees and managers from imposing higher charges on members who are not contributing than they would on comparable members who are contributing to the pension scheme.

Regulation 12 makes amendments to the Stakeholder Pension Schemes Regulations (Northern Ireland) 2000 to provide that the provisions in these Regulations apply to stakeholder pension schemes, where appropriate.

Chapter 1 of Part 3 contains provisions relating to governance of relevant schemes by making amendments to the Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997 (“the Administration Regulations”) and the Occupational Pension Schemes (Investment) Regulations (Northern Ireland) 2005. These provisions include the overriding of any provision in the trust deed or scheme rules which limits the choice of service providers (regulation 15). They also impose duties on trustees and managers to—

• appoint a chair of trustees or managers (regulation 16);

• prepare an annual statement of governance (regulation 17);

• process core financial transactions promptly and fairly (regulation 18);

• calculate and assess the value for money of charges and transaction costs (regulation 19), and

• prepare a statement of investment principles in relation to the default arrangement (regulation 20).

Chapter 2 of Part 3 contains additional governance requirements for multi-employer schemes (known as “master trusts”) by making further amendments to the Administration Regulations. This includes additional provisions for the annual statement (as set out in regulation 17), the appointment of trustees and the representation of members (regulation 22).

Regulations 13, 16(4) and 17(2) make consequential amendments to other regulations.

Regulation 23 provides that the third limb of the definition of “multi-employer scheme” which is inserted by regulation 21 and relates to schemes established by or under a statutory provision is omitted from 6th April 2016.

Part 4 contains compliance provisions in relation to the duties imposed by these Regulations.

As these Regulations, in so far as they are made under the Pensions (Northern Ireland) Order 1995 (“the 1995 Order”), the Pensions (Northern Ireland) Order 2005 (“the 2005 Order”) and the 2015 Act, make in relation to Northern Ireland only provision corresponding to provision contained in regulations made by the Secretary of State for Work and Pensions in relation to Great Britain, the requirement for consultation does not apply by virtue of Article 117(2)(e) of the 1995 Order, Article 289(2)(e) of the 2005 Order and paragraph 8 of Schedule 18 to the 2015 Act.

The Pensions (2015 Act) (Commencement No. 1) Order (Northern Ireland) 2015 (S.R. 2015 No. 307 (C. 25)) provides for the coming into operation of section 42 of, and Schedule 18 to, the 2015 Act, some of the enabling provisions under which these Regulations are made, on 16th July 2015.

Assessments of the impact of these Regulations are detailed in Regulatory Impact Assessments, copies of which have been laid in the Business Office and the Library of the Northern Ireland Assembly. Copies of the Assessments are available from the Department for Social Development, Social Security Policy and Legislation Division, Level 1, James House, 2-4 Cromac Avenue, Gasworks Business Park, Ormeau Road, Belfast BT7 2JA or from the website: http://www.dsdni.gov.uk/index/ssa/customer-information/ssa_pension_information.htm. Copies of the Assessments are also annexed to the Explanatory Memorandum which is available alongside this Statutory Rule on the website: http://www.legislation.gov.uk/nisr.