Information Note on the Occupational Pension Schemes (Duties of Trustees in Connection with Bulk Transfer) Regulations 2009 (S.I. No. 177 of 2009)

Friday 3 July 2009: The Occupational Pension Schemes (Duties of Trustees in Connection with Bulk Transfer) Regulations 2009 (“the Regulations”) were signed into law on the 7 May 2009. The Regulations impose various requirements on trustees to give certain information when carrying out a bulk transfer from a pension scheme for which the consent of the members is not required. It includes a bulk transfer arising from the winding up of such a scheme. A bulk transfer is a transfer of an amount of money or other resources by the trustees of a scheme in discharge of their liability under the scheme to provide benefits for a group of members. The Regulations come into effect on the 1st August 2009.

Notification

The Regulations prescribe that information regarding the bulk transfer must be notified by the transferring trustees to the transferring scheme members and their authorised trade union (if any) at least 2 months before the date of the proposed bulk transfer. The notification for the members should be sent to the address provided by or on behalf of the member to the transferring trustees. The information to be given includes:

• the circumstances giving rise to the bulk transfer.
• a detailed description of the benefit structures of the transferring scheme and the receiving scheme. This includes a requirement to describe the practice regarding discretionary benefit and the rules regarding surplus funds.
• where the transfer is to receiving trustees, a detailed description of the benefits to be given to the transferring members in the receiving scheme. where the transfer is to a PRSA, basic information on the type of product including whether it is a standard or non-standard PRSA. Details of the contributions to be paid to the PRSA e.g. whether the contribution will include extra funds received from the employer must be given.
• details of any loss or adverse effects on the transferring members and any charges to be paid.
• the procedures involved for members or an authorised trade union in making observations and consideration by the transferring trustees or employer of these observations.

If the transferring scheme is defined benefit, the trustees must provide the following additional information in the form of a statement signed by the actuary to the transferring scheme:

• information on the manner in which the payments from the transferring scheme and benefits in the receiving scheme or contributions to a PRSA are calculated, including how discretionary benefit practices are provided for in the actuary’s calculations.
• confirmation whether, immediately after the bulk transfer, the minimum transfer value of each transferring member in the receiving scheme will be at least equal to the member’s minimum transfer value in the transferring scheme immediately before the bulk transfer. A similar confirmation must be given for the value of contributions that are proposed to be paid to PRSAs.
• whether if the receiving scheme was wound up immediately after the bulk transfer, the payment from the receiving scheme would be at least equal to the payment from the transferring scheme, on the assumption that the transferring scheme, if it was not already wound up or in the process of being wound up, will be wound up immediately before the bulk transfer. This is based on the payments which would be reasonably likely to be made for each transferring member in respect of the service covered by the bulk transfer.
• whether the ratio of resources to liabilities in the transferring scheme immediately before the bulk transfer is reasonably likely to be at least equal to the ratio of resources to liabilities in the receiving scheme immediately after the bulk transfer.
• details of the calculations and assumptions used by the actuary. This should include the effective date used for the calculations.

Observations

The transferring member or an authorised trade union has 1 month from the date of notification to make written observations on the proposed bulk transfer. The transferring trustee or the employer must confirm in writing, before the bulk transfer is effected, that they gave due consideration to any observations made within the specified time limits.

Changes to the proposed bulk transfer

After the notification of the proposed bulk transfer has been given the trustees must take all steps reasonably open to them to satisfy themselves that there has been no material change to the proposal between the date of notification and the proposed date for the bulk transfer. If there has been a material change the transferring trustees must revise the information already given and notify the relevant parties of the changes as specified in the legislation. A further month is then allowed for the transferring members or authorised trade union to make observations on the revised notification.

This note is prepared for information purposes only and is not a legally binding interpretation of the Act. No liability whatsoever is accepted by The Pensions Board, its servants or agents for any errors or omissions in the information contained in this document or for any loss occasioned to any person acting or refraining from acting as a result of any statement in this document.