Safeguarding Pension Rights - PowerPoint PPT Presentation

Safeguarding Pension Rights

Ray Martin

Vice-Chairman - EFRP

• Safeguarding Pension Right equals transferability of pension rights
• This is not true, the transfer value of not a lot is not a lot !!!

• Immediate Vesting - number one priority
• Protection of consumers from mis-selling and excessive charges
• Cross border recognition for tax relief
• Transferability is then the final piece in the protection

• Pension rights are part of an employee’s remuneration package and should not be taken away.
• A small vesting period is tolerable for administrative reasons - up to 2 years
• Vested benefits then should be protected in real terms against inflation

• Closed Funds vs Open Funds
• Closed Funds are those that are those set up by a single employer, or group of employers, and are controlled by the employer(s) and the employees
• Open Funds are those that are sold commercially either directly to the employees or through their employer, but the management remains with the provider.

• Based on relationship between employer and employee
• Member elected Directors / Fiduciaries
• Minimum Funding Requirement
• Independent Custody / Management
• Independent contract with Investment Managers
• Duty on fiduciaries to act prudently

• Independent Advice
• Cooling-off periods
• Maximum Charges
• Solvency requirements for products with interest or mortality risks
• Right to cease contributions
• Maximum surrender penalties

• For a short period, say up to five years, employees should be able to continue contributing to their home plan and receive tax relief equivalent to the host country
• To be given effect through double taxation treaties, and in Europe at a EU Level.

• More important within country than across border, to ensure employees not tied into one provider
• Cross border is helpful because, it
• allows consolidation
• avoids currency risks for pensioners
• simplifies tax affairs