Questions relevant to current registration/authorisation process
Q.By when do I need to be registered?
A. By 13th January you or your advisors should notify the GFSC that you require registration and provide us with contact details.
Within 6 months of the legislation being published you will be required to complete the registration process, details of which will be provided by the GFSC.
The legislation provides a 6-month transitional period to enable institutions that require registration under IORP II to apply for the registration within that timeframe. Such institutions will be treated as if they were registered as from 13th January until the application for registration is determined by the GFSC and registration is confirmed.
Q.If I am in the process of closing my scheme how am I affected by IORP II – do I need to fill in forms?
A. You will need to notify the GFSC by 13th January about your scheme and if the scheme has not closed within 6 months of the legislation being published then you will need to be registered/authorised.
Q.I have deferred members which makes my total number of members over 100, what do I need to do?
A. If you have not already done so, you should have advised the GFSC of this and work with us to submit the application documentation as soon as possible.
Q.When are the first set of audited accounts due?
A. Audited financial statements will be required within 6 month of year end whether the firm already has these or will commence having audited financial statements.
Registered Schemes Questions
Q. How many members in a scheme qualifies it as a registered scheme?
A. All schemes that have over 15 Members need to be registered. The number of Members mentioned above also includes Deferred Members.
Q.Do Registered Schemes require an audit? - as these costs can be significant.
A. Registered Schemes do not require an audit – they need to comply with specific provisions and external audit is not included.
Q.I have under 15 members what do I have to do?
A. You need to monitor this and as you near the 15 member mark talk to the GFSC about registration. You should note that once you have 15 members you will be required to meet the requirements of the registered schemes.
Q. Does the Directive cover Personal Pension plans, as some Employers contribute to Personal Pension plans for their Employees?
A. If your scheme is caught under IORP II, it will depend on whether the pension arrangements are set up as a Pension Scheme, meaning a contract, an agreement, a trust deed or rules stipulating which retirement benefits are granted and under what conditions.
The Pension Scheme would need to be set up separately to its Sponsor Company. Sponsoring Undertaking means any undertaking or other body, regardless of whether it includes or consists of one or more legal or natural persons, which acts as an Employer or in a Self-Employed capacity or any combination thereof, and which offers a Pension Scheme or pays contributions to an IORP; and the Employee will have legal benefits. The Sponsor Company cannot then redeem the assets.
If a scheme is set up as a Personal Pension Plan we would not expect it to be caught as an IORP.
Q.What happens when a registered scheme needs to be authorised?
A. Registered schemes should be monitoring the number of members, particularly where it is getting close to the 100 member mark. If a registered scheme is getting close to the 100 member mark it should contact the GFSC to discuss the authorisation process and it should also start working on familiarizing itself with the IORP II requirements. The GFSC can then refer the scheme to the relevant authorisation forms that would be required. The scheme will also need to start complying with all IORP II requirements as soon as it reached 100 members.
Q. What happens if I am an authorised scheme and for a temporary period I drop under 100 members.
A. An authorised scheme dropping under 100 members can remain authorised if it wishes to. It would have to be clear of its intentions in its communications with the GFSC.
Authorised Scheme Questions
Q.What are the differences between the Provider and the Scheme?
A. The Regulated/Authorised entity is the Scheme, irrespective of its legal form which is established for the purpose of providing retirement benefits in the context of an occupational activity on the basis of an agreement or a contract.
Schemes and Providers will have different arrangements and it should be clear that for the purposes of IORP II the GFSC sees the scheme as the entity providing the retirement benefits and not any of the providers such as the trustees.
IORP II does not directly regulate or define Providers; it does put some expectations on these, for example, the remuneration policy shall apply to the IORP and to the Service Providers. These and other similar requirements which are expected of Providers will be enforced via an agreement that the IORP needs to have in place with its Provider, which will ensure that the Provider complies with the relevant requirements.
Q. Remuneration for Trustees – how do the IORP II rules affect this? What details need to be published and provided to members?
A. The requirements aim to discourage remuneration policies which encourage excessive risk-taking behaviour as these can undermine the sound and effective risk management of IORP.
The expectation is for there to be a policy setting out the IORP remuneration details as they apply to anyone who can have a material impact on the scheme. The process the firm follows will have to comply with the principles as established in the IORP II requirements.
The requirements on publication are on the policy itself and the detail will be dependent on the complexity and nature of the scheme. It would be the GFSC’s expectations that each scheme makes a consideration in this respect.
The Scheme will also need to be observant of advice published by the EU or EIOPA in this area.
Q. On Umbrella Schemes what is the approach on audited accounts, are these needed for each Pension Scheme?
A. IORP II refers to having audited accounts per Authorised Scheme.
Q. What is expected from the own risk assessment required by Article 28, and how does this impact on Defined Contribution Pension Schemes?
A. This is expected to be proportional but it does cover, for example, the risk assessment that forms part of the decision-making process. We would expect Schemes to understand the main risks they face as a result of, for example, the external environment. This assessment should help the trustees make informed decisions.
Many of the areas listed in Article 28 will not be relevant to the average Defined Contribution Scheme in Gibraltar, but an assessment will still be expected.
Q. Are Pension Schemes outside Europe providing Pensions for people locally caught by IORP II?
A. The requirement to be Registered/Authorised depends on the definition of the Home State, whether being registered or authorised and where its main administration is located in accordance with Article 9.
Q.Will pension schemes be required to issue benefit statements to members each year? What form will they need to take?
A. Our expectation is that all schemes will issue benefit statements to all members at least annually. The content is prescribed under IORP II. The content must be clear and easy to understand. We will take into consideration the challenges faced by schemes who do not currently produce these documents, for example, the cost that would be incurred in providing projections based upon assumed growth rates.
Please see publication by EIOPA setting out further expectations in this regard: https://eiopa.europa.eu/Pages/News/EIOPA-news-13-11-18.aspx