Retirement Benefits Schemes Regulations
Benefit Schemes need to review and align their trust deeds and scheme rules to the new Regulations.
- The Retirement Benefits (Umbrella Retirement Benefits Schemes) (Amendment) Regulations, 2021
Amendments to the URBS Regulations provide that where a retirement benefit scheme has appointed a trust corporation, the trust corporation is forbidden from appointing service providers related to it through ownership, directorship, or employment. This is to reduce conflict of interest issues when running the pension scheme. The regulations also provide that a member, upon request in writing to the trustees, has access to not more than 50% of their accrued benefits and accrued invested income based on contributions.
2. The Retirement Benefits (Occupational Retirement Benefits Schemes) (Amendment) Regulations, 2021
The regulations provide that where a member leaves employment before attaining the specified early retirement age, that member may opt for payment of not more than fifty per cent 50% of his total accrued benefits and the investment income that has accrued in respect of those contributions. The government indicated in its policy statement, that this is meant to cushion employees by ensuring they have a retirement fund to fall back on upon retirement.
Defined benefits schemes are required to be valued by an actuary every three (3) years, to ensure that they meet specified pension scales as promised. The Amended regulations (Regulation 31) have increased the period within which the actuarial valuation report should be submitted to the Retirement Benefits Authority and the scheme’s sponsor from 5 months to 6 months, after the end of that financial year.
3. The Retirement Benefits (Individual Retirement Benefits Schemes) (Amendment) Regulations, 2021
The IRBS Amendment Regulations Instrument highlights the following:
- Regulation7, paragraph (j)- Individual Pension Plan Schemes are now required to provide immediate vesting of contributions. This is in line with the provisions of the Retirement Benefits (Treating Customers Fairly) Guidelines, 2019.
- Regulation 9, paragraph 4 prohibits appointment of administrators related to the trust corporation by way of ownership, directorship or employment. This is to avoid conflict of interest.
- When transferring retirement benefits from an Occupational Retirement Benefit Scheme to an Individual retirement benefit Scheme, Regulation 16 allows a member to opt for payment of not more than 50% of his total accrued benefits, and the investment income that has accrued in respect of those contributions. This is compensatory to the employees as they will not start pension contributions from scratch.
- Regulation 17- accrued retirement benefits vest on the employer if the employer was making contributions on behalf of the employee. This curbs employees from riding on the employer’s contributions before attaining retirement age.
- The employee is entitled to less than or equivalent to 50% of accrued benefits and invested income if the employee leaves before attaining retirement age. This ensures employees have a retirement fund to turn to upon retirement.
- If a member of an Individual Pension Plan Scheme retires early, they may opt for payment of accruing retirement benefits if they paid their own contributions to the scheme. This development allows members to access all pension benefits rather than half of the contributions, thus serving as an unswerving investment for employees.