What is IORP II?
IORP II is an EU Directive that set new requirements for occupational pension schemes. Legislation was passed into law in April 2021 in Ireland enforcing significant compliance demands on trustees. Trustees of occupational pension schemes are, in general, expected to provide for enhanced administration and governance that will incur substantial ongoing costs to the scheme resulting in a considerable financial cost for the member.
What happens if trustees don’t comply with IORP II?
The Pensions Authority monitors compliance with all provisions of the Pensions Act. Persons found guilty under the Act are normally liable:
- On summary conviction to a fine not exceeding €5,000 or to imprisonment for a term not exceeding one year or to both, or
- On conviction on indictment to a fine not exceeding €25,000 or to imprisonment for a term not exceeding two years, or to both.
Trustees should be aware the Pensions Authority will require us, in the near future, to provide full details of all active schemes to assess compliance.
It’s time to take action
If the trustee decides it’s not in the best interest of the member to incur the substantial ongoing cost incurred by providing for the enhanced administration and governance required under IORP II legislation, the Synergy Executive Pension should be wound up and transferred to an alternative arrangement as soon as possible.
The options available are:
- transfer to a Personal Retirement Savings Account (PRSA)
- transfer to another occupational pension scheme (including a master trust from another provider)
- transfer to a Buy Out Bond, or
- retire, if the circumstances are right.
You can find more information in Your guide to IORP II.
Synergy Executive pension with Lane Clark and Peacock Trustee Services Ltd (LCP) as trustee
As the fulfilment of IORP II requirements will incur significant additional costs to the member, Lane Clark & Peacock Trustee Services Ltd (LCP), as trustee and Standard Life, as registered administrator have determined the best course of action is to wind up the scheme and transfer to an alternative arrangement. This needs to be completed as quickly as possible to ensure members will not incur the significant additional costs that complying with IORP II requirements would impose.
PRSA – an alternative solution for your customers?
A PRSA can now be used as a whole of life pension arrangement meaning an employee can save for retirement and then draw their retirement income, without the requirement to change products, simply by Vesting the PRSA.
Other reasons to consider a PRSA include:
- Tax-efficient death in service benefits: Payment of the full PRSA policy value to the employee’s estate, where an employee dies in service
- Single relationship solution: There’s no third-party involvement so decision making, reviews and retirement options are all conducted one-to-one between adviser and client
- Simpler funding calculations: Once the maximum yearly employer and employee contribution limits are followed, there are no complicated funding calculations like those under occupational schemes
- Flexible Retirement: The ability to draw down retirement benefits in stages, up to age 75, using multiple PRSAs.
A Synergy PRSA offers an extensive range of product options designed to cater to the ever-evolving needs of our customers and advisers. Visit the Synergy PRSA adviser hub for more information.
Talk to your business manager today about IORP II, and request a list of your active Synergy Executive Pensions.