Pensions Update: Summer 2021

• Published date: 19 July 2021
• Subject Matter: Employment and HR, Retirement, Superannuation & Pensions, Employee Benefits & Compensation
• Law Firm: Arthur Cox
• Author: Mr Philip Smith, Sarah McCague, Michael Shovlin, Daniel Watters, Katie Lawless and Doireann Nic Mhathúna

TRANSPOSITION OF IORP II

The domestic implementing regulations for IORP II, the European Union (Occupational Pension Schemes) Regulations, 2021 (the "Regulations") were signed into Irish law on 22 April last and, in the main they did not contain anything unexpected. While there has been some initial guidance from the Pensions Authority (the "Authority") on the Regulations, the Authority has indicated that it will issue a draft code of practice on IORP II in the week commencing 19 July for public consultation with the final version to be published in November. This code of practice will supplement the high-level obligations outlined in the Regulations. Until then, trustees and employers should focus on familiarising themselves with the requirements of the Regulations and preparing for the first compliance date (which relates to putting in place a remuneration policy and having a minimum of two trustees effectively running a scheme) of 31 December 2021.

For more information in respect of the Regulations please see our recent IORP II briefing here.

EMIR (EUROPEAN MARKET INFRASTRUCTURE REGULATION)

Under the EMIR Regulation 648/2012 as amended by EMIR Refit Regulation 2019/834 (together the "Regulation") certain pension arrangements (which are deemed to be financial counterparties under the regulations) are required to clear certain over the counter ("OTC") derivative contracts including interest rate, foreign exchange, equity, credit and commodity derivatives via a central counterparty. Pension arrangements had originally been granted an exemption in respect of these clearing obligations until 18 June 2021.

The Commission Delegated Regulation (EU) 2021/962 was recently published in the Official Journal and this regulation has further extended the central clearing exemption for pension arrangements by a further year until 18 June 2022.

REVENUE UPDATE TO PENSIONS MANUAL CHAPTER 23

On 29 June Revenue updated chapter 23 of the Pensions Manual to provide updated guidance for non-resident owners of Approved Retirement Funds ("ARF"), vested Personal Retirement Savings Accounts ("PRSA") or Approved Minimum Retirement Funds ("AMRF").

Among the updates, Revenue have included a link to the new Refund of Taxes Paid on ARF Distributions Claim form which is to be completed by non-resident claimants seeking a repayment of Irish tax on an Irish pension as well as additional information for refund claims made by non-resident claimants with unit linked ARF funds. The additional information includes further detail and worked examples in relation to the application of double taxation agreements to distributions from ARFs, vested PRSAs and AMRFs.

RECENT CONSULTATIONS

Three consultations relating to pensions in Ireland have recently closed. The topics addressed in the consultations included: the fees payable by pension arrangements to the Authority; the gender gap in supplementary pensions; and sustainability of the State Pension and the Social Insurance Fund. Details of these consultations are set out below:

Pensions Authority Consultation paper on fees

i. The Authority has published a consultation paper on fees paid by occupational pension schemes, trust RACs and PRSA providers. This is partly being driven by the IORP II Directive which requires the Authority to adopt a forward-looking risk-based approach to supervision which will involve more direct engagement with trustees and as a consequence an increase in staff numbers within the Authority. The Authority has stated that if its fee income remains unchanged, it would represent just 60% of projected...