Independent trustee option FAQ
This FAQ examines the independent trustee option for one-member company pensions.
Who can act as trustee to Irish Life one-member company pension plans?
Irish Life has appointed Harmony Pension Trustees Ltd (HPT), part of the ITC Group, to act as independent trustee on these one-member schemes until they move to the master trust.
What is the role of the trustee on a company pension scheme?
A trustee’s role is to oversee the pension scheme. It is required to act prudently and in the best financial interest of the beneficiaries. A trustee is also the legal owner of the assets.
The role of a trustee is separate to the role of an adviser. For example, a trustee will not give investment advice; this remains the adviser's role. Undertaking both roles could be considered a conflict of interest. Independent trustees are committed to supporting you as adviser by stressing the importance of the member taking financial advice.
How is Harmony Pension Trustees appointed to an existing Irish Life one member scheme?
The employer and member can complete a supplementary letter of exchange to appoint Harmony Pension Trustees.
Supplementary letter of exchange to appoint Harmony Pension Trustees
When completed send to existingbusiness@irishlife.ie
Is there any difference to the process, depending on whether the employer is acting as trustee or an independent trustee has been appointed?
The employer and the member continue to make the decisions and give instructions regarding the level of contributions, the investment choice, and the payment of retirement benefits. This is the case, no matter who acts as trustee.
There are some small differences to Irish Life’s processes depending on who is trustee. You can see how this works for the most common requests below.
| Decision | Decision made by: | Independent trustee | Employer acting as trustee |
|---|---|---|---|
| Investment choice | Investment decisions are made by the employee. | Confirmation of the fund choice can be given by the employee directly to Irish Life. | Confirmation of the fund choice is given by the employee to the employer as trustee. The employer then informs Irish Life of the fund choice. |
| Contribution amount |
• Employer may decide how much it pays. • Employee may decide how much AVCs to pay. |
So that the employer controls the payroll deduction process and how much is taken from its bank account, they must confirm all changes to contributions, such as increases, reductions, suspensions or changes in frequency. | |
| Retirement claims and transfers |
• Employee may choose retirement options, e.g. whether to go the ARF route or the salary & service plus annuity route. • The employer will provide certain information, for example salary and service information to allow us to check Revenue maximum benefit limits. • The employer must also confirm leaving service on early retirement. |
• The employee signs the claim form to confirm the option selected and required information. • There is no need for the employer or employee to contact the independent trustee. Irish Life will work with the independent trustee to arrange its sign off as legal owner of the plan. |
The employer as trustee and employee both sign the claim form to confirm the option selected and required information. |
Who is acting as trustee will, in some instances, determine to whom correspondence is issued.
When we receive an instruction on a plan, who receives correspondence confirming that the request has been processed will be determined by who gave the instruction. For example;
The only decision made directly by the independent trustee is on the payment of death in service benefits as outlined below.
How does the independent trustee decide how death-in-service benefits are paid?
On the death of a member while in service, the independent trustee will contact the personal representatives of the member and any other relevant people in order to determine who should receive the lump sum and any spouse’s/dependant benefit payable.
The member may give the trustees a ‘letter of wishes’ at the commencement of the scheme. This is a written request from the member that benefits are paid in a certain way on death. The member may update the ‘letter of wishes’ at any time. While this request is not binding on the trustees, they will take it into account when deciding how benefits will be paid.
If the member dies after leaving service with the employer, having completed at least two years in the scheme, then in accordance with the Pensions Act 1990 the benefit must be paid to the deceased's estate. It will then be for the personal representatives to distribute the benefit, either in accordance with the member’s will or in accordance with the terms of the Succession Act 1965.
Is an independent trustee required on one-member company pension term assurance plans?
No, company pension term assurance plans are excluded from the requirements of IORP II. Currently the only available option Irish Life has on new one-member company pension term assurance plans is for the employer to be appointed as trustee.
When will the independent trustee contact the employer and employee?
The adviser continues to be the key support to one-member company pension scheme clients. Any instructions on plans, or requests for information, should be sent to Irish Life, and we will contact the trustee if necessary. Usually there is no need for the adviser or client to contact the trustee directly.
As the independent trustee is the legal owner of the pension plan, they may need to become involved at certain times. For example:
- On the death of the member, the independent trustee will contact the necessary people to determine who receives the death-in-service benefits
- if a Pension Adjustment Order is issued following the divorce or judicial separation of the member
- on a complaint involving the Financial Services and Pension Ombudsman or that involves the trustees Internal Disputes Resolution procedure
Does appointing an independent trustee remove all duties and responsibilities from the employer?
While appointing an independent trustee removes all trustee duties from the employer, under the Pensions Act 1990 some duties remain the employer’s responsibility. In particular it is very important that contributions due are paid to the pension scheme. Amounts deducted from the employee’s salary/wages must be paid over to the pension scheme by the 21st of the following month.
The employer is responsible for passing on employee pension contributions in all circumstances. Whether the employer acts as trustee, an independent trustee acts as trustee, or the employer uses a PRSA scheme, the Pensions Act puts the same duty on the employer to pass on employee pension contributions by the 21st of the following month.
In addition, the employer must provide its employees with a statement, usually on the payslip, showing the employer and employee contributions paid in the previous month.
The employer should also keep Irish Life up to date on any changes to employer or member details.
Where can I get more information on the independent trustee companies?
Harmony Pension Trustees
Harmony Pension Trustees is part of the ITC Group, which has been trading since 1993. Headed by Tommy Nielson and Aidan McLoughlin, it aims to provide a high-quality and professional independent trustee service.