Following the issue of a consultation document on the proposed amendments to the Retirement Pensions Act and on the amendments to the Pension Rules, the MFSA has published the new rules for Occupational Retirement Schemes. The rules apply to pension schemes, retirement funds and service providers and deal with matters such as the required contents of scheme documents, reporting requirements, schedule of payments and the actuarial Transfer Value Certificate.
This process was carried out in order to transpose Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (“the IORP II Directive”).
The IORP II Directive is a minimum harmonisation directive that introduces a new regulatory framework for occupational retirement schemes, and its main objective is to provide for the adequate protection of members and beneficiaries of occupational retirement schemes. The legislation aims to ensure higher standards of governance and a modern risk-based governance system to improve risk management and transparency of institutions for occupational retirement provision.
In order to complete the transposition of the IORP II Directive, various amendments were required to be made to the Pension Rules. The Pension Rules issued under the Retirement Pensions Act (Cap.514) supplement the Retirement and the following Legal Notices:
- Legal Notice 48 of 2020 – Retirement Pensions (Cross-Border Activities and Cross-Border Transfers) Regulations, 2020- which aims to further facilitate pension schemes by reducing barriers to cross-border activity, with the aim of encouraging cross-border pension provisions. These regulations address the provision of cross border activities by an institution for occupational retirement provision and the transfer of all or part of its assets and liabilities to an institution based in another Member State
- Legal Notice 50 of 2020 – Retirement Pensions (General Provisions of Supervision) Regulations, 2020 which sets out the competent authority’s remit in the prudential supervision of a retirement scheme
- Legal Notice 46 of 2020 – Retirement Pensions (Transitional Provisions on Back-Office Administrators) Regulations, 2020 which addresses the surrender of the recognition certificate for persons providing back-office services by not later than twelve months from the coming into force of the regulations
- Legal Notice 47 of 2020 – Retirement Pensions (Control of Assets) (Amendment) Regulations, 2020 which includes a number of minor amendments to the regulations concerning custodians
- Legal Notice 49 of 2020 – Retirement Pensions (Exemption) (Amendment) Regulations, 2020- which removes reference to the exemption for providing back office services
- Legal Notice 45 of 2020 – Retirement Pensions (Defined Benefit Retirement Schemes) (Amendment) Regulations, 2020 which establishes that every retirement scheme shall be subject to and shall comply with a technical funding requirement, as well as with provisions regarding under-provision or over-provision of the technical funding requirement
The amendments were primarily carried out to transpose the remaining provisions of the IORP II Directive, which had not been included in the Act and regulations issued thereunder. Such amendments also aligned the Pensions Rules for Occupational Retirement Schemes with some of the requirements that have been introduced in the Pension Rules for Personal Retirement Schemes.
This article was written by Dr Cherise Abela Grech and Dr Luke Mizzi.
Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.