IRELAND - The Irish minister for social and family affairs has claimed four successful prosecutions by the Pensions Board in 2007 should "send a message" not to take risks with other people's money.
The Pensions Board initiated 59 new investigations into issues concerning occupational pension schemes during 2007, and successfully prosecuted four firms for failing to provide information in respect of personal retirement savings accounts (PRSAs).
Figures from the Board's annual report for 2007, launched in Dublin by Mary Hanafin, the Irish minister for social and family affairs, revealed the Board was involved in 65 open investigations, of which 41 were related to defined benefit (DB) schemes.
The report showed 25 of the investigations initiated in 2007 were the result of 'whistleblower' reports from inside the schemes - 15 in relation to DB schemes - of which 18 involved issues with outstanding contributions from employers.
The Pensions Board claimed these cases are at "various stages of intervention or have been satisfactorily resolved", and it suggested the introduction of 'on-the-spot' fines in September 2007 had helped raise awareness of the importance of compliance.
Brendan Kennedy, chief executive of the Pensions Board, revealed 16 schemes have been given a fine notice since the new power came into effect, compared to four prosecutions through the courts.
At the launch of the report Hanafin also added while the number of prosecutions was small, they "send a message that you can't take risks with other people's money in pensions".
However, Kennedy said the Board is "being measured" in rolling out the fines as "every time we issue a fine they [the recipient] can decide not to pay it and go to court instead", but he admitted the power had "put a lot of focus on compliance" and has "increased awareness of the need to be compliant".
The fines of €2,000 are an alternative to prosecution and can be applied to certain administrative offences such as the failure to register a scheme, failure to provide members with appropriate information or failing to respond to requests for information from the Board.
Examples of these types of offences reported in 2007, which have now been resolved to the Board's "satisfaction", included the discovery of an Irish DB scheme - administered in the UK - which had not been registered with the Board; and administrators of a scheme failing to invest contributions in a "timely fashion".
Following on from this, the report claimed the new requirement for all third-party pension administrators to be registered with the Pensions Board by November 1 2008 will provide 'important support" and confidence to trustees.
Kennedy said the change follows concerns, first identified in 2006, of a "bit of confusion over responsibility" for certain tasks between trustees and administrators. (See earlier IPE article: Pensions Board highlights admin regulation risk)
He pointed out there are around 100,000 trustees in Ireland, but 20 of the biggest administration firms deal with approximately 95% of trustees - making it more efficient to target the administrators with new regulation.
However, Kennedy pointed out the change, although a big step, is more of a "continued evolution" as the Board had already been in dialogue with administrators about these issues, so the new requirement is simply "formalising something which was emerging anyway".
He added if the Board talks to administrators "in general" but also about how they can operate better, "it is more pro-active and more constructive".
Kennedy meanwhile claimed the Board is not disappointed by the take-up of PRSA's since their introduction in 2002, as it doesn't have a PRSA target, only a pension coverage target - which is 70% of workers over the age of 30.
The chief executive claimed PRSAs are a "pretty significant part of the pensions landscape, as figures from the annual report showed the 130,709 PRSA contracts have assets valued at €1.25bn - a 50% increase from the end of 2006.
In addition, figures from the annual report revealed the total active membership of occupational schemes increased from 777,653 in 2006, to 800,398, while the number of DB schemes meeting the Board's funding standard also increased from 70% to 81% at the end of 2007.
That said, Kennedy admitted while progress on meeting the overall pension coverage target has been "steady", with the current level at 62%, "as long as its short of 70% then we're disappointed".
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