Sovereign Annuity Regulations now in force
The Pensions Board
Friday 20 January 2012: The following Sovereign Annuity Regulations are now in force:
1. The Occupational Pension Schemes (Disclosure of Information) (Amendment) Regulations, 2012 were signed into law by the Minister for Social Protection, Joan Burton T.D on 11 January 2012.
These Regulations came into force on 11 January 2012 and amend the Occupational Pension Schemes (Disclosure of Information) Regulations 2006 by setting out the information which trustees are required to disclose to pensioners when they purchase a sovereign annuity policy in their name. Trustees must provide this information to the pensioner in whose name they purchase the policy as soon as practicable and in any event within two months after the purchase of the policy from the insurer. This information is:
- The name and address of the insurer who issued the policy and contact details for questions or complaints;
- The policy number;
- The registration number assigned by The Pensions Board upon certification of the specimen form of policy;
- The amount of benefit payable under the policy to or in respect of the pensioner;
- The percentage of the payments under the policy referenced to one or more EU sovereign bond(s);
- An explanation of the circumstances in which payments under the policy can be reduced or restored;
- Where the policy allows for bonds to be replaced with other bonds, an explanation of this, its effect for payments under the policy and the circumstances in which payments can be reduced or restored in that event; and
- The interest rate which will be used in calculating any reduction or restoration and whether any reduction in or restoration of payments will be applied immediately or spread forward over future payments under the policy.
Finally, where trustees purchase a sovereign annuity policy in the name of a pension scheme member, they must provide them with a written statement explaining the policy’s effect. This statement must note that payments under the policy depend on the EU member state which issued the bond meeting their payment obligations. It must highlight the fact that payment under the policy is not guaranteed and may be reduced. The Regulations provide a template statement. The Trustees are permitted to change the template statement only if they are of the reasonable opinion that their changes better explain the policy’s effect to the member concerned.
2. The Pensions Act (Register and Database of Certified Policies or Contracts of Assurance) Regulations, 2012 were signed into law by the Minister for Social Protection, Joan Burton T.D on 11 January 2012.
These Regulations came into force on 11 January 2012 and set out the information which The Pensions Board is required to keep on its register and database of sovereign annuity policies, the form of which have been certified by The Pensions Board. This information is: the name and registered office or principal place of business of the insurer which issued the form of sovereign annuity policy; the date of certification by The Pensions Board; the registration number assigned by The Pensions Board and (where applicable) the date of withdrawal of certification. Trustees and members of the public will be able to access this register.
For further information on sovereign annuities, trustees should refer to The Pensions Board FAQs for Trustees on Sovereign Annuities dated 26 October 2011.
This note is prepared for information purposes only and is not a legally binding interpretation of the Act or the Regulations referred to. No liability whatsoever is accepted by The Pensions Board, its servants or agents for any errors or omissions in the information contained in this document or for any loss occasioned to any person acting or refraining from acting as a result of any statement in this document.
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