Proposed new pensions supervisory framework for consultation (2017-05-04)

Summary

This is a Guernsey Financial Services Commission consultation releasing a draft version of new pension supervisory rules, titled the Pension Licensees (Conduct of Business) and Domestic and International Pension Scheme Rules 2017. The draft would replace and expand the existing pensions framework, setting out conduct of business, governance and scheme-specific requirements for licensees involved in forming, managing or administering pension schemes in the Bailiwick of Guernsey. The draft text itself states a proposed commencement date of 30 June 2017, but as a consultation document this is subject to change before finalisation.

• Scope: Applies to holders of a full fiduciary licence (and licensed insurers, insurance managers and insurance intermediaries acting as such) engaged in the formation, management or administration of Domestic and International Pension Schemes, including retirement annuity trust schemes.
• Governance and compliance: Requires corporate governance and senior management responsibility for pension business, a designated Compliance Officer, a compliance monitoring programme, employee screening and training.
• Financial and record keeping: Sets requirements for accounting records, audited financial statements, an auditor, general record keeping, and rules on destruction of records.
• Conduct and complaints: Covers fitness and propriety, promotion and advertising standards, a complaints procedure with notification and record-keeping duties, and a conflicts of interest policy.
• Notifications to the Commission: Requires notification of scheme establishment details, changes to provider/service provider information, and other prescribed notifications under the Law.
• Pension scheme rules: Sets detailed requirements on governing documentation, governance procedures, treatment of members and beneficiaries, contributions, charges, benefits, transfers, investment rules (including a statement of investment principles and restrictions on Employer-Related Investments), and permissible investment categories (Appendix 1).
• Annual reporting: Appendix 2 lists information Providers must report on establishment and annually, including member numbers, scheme openness to new members/contributions, investment approach changes, and scheme asset values and contributions.

The document also proposes revoking the Retirement Annuity Trust Schemes Rules, 2015 upon commencement of the new rules, and includes a placeholder for a transitional period section (marked 'to be inserted') and a derogation mechanism carried over from the existing Licensees (Conduct of Business) Rules 2014.

Key obligations

• Establish corporate governance arrangements and senior management responsibility specifically covering pension business
• Appoint a Compliance Officer and maintain a compliance monitoring programme, employee screening and employee training arrangements
• Maintain proper accounting records and produce audited financial statements prepared to generally accepted accounting principles
• Maintain records in accordance with the rules and follow specified procedures before destroying records or files
• Establish and operate a complaints procedure, notify the Commission of complaints as required, and keep complaint records
• Maintain a conflicts of interest policy
• Notify the Commission of pension scheme establishment details (date of establishment, Provider and Service Provider details) and report annually on matters listed in Appendix 2 (member numbers, scheme openness, investment approach changes, contributions and asset values)
• Ensure Governing Documentation and Governance Procedures are in place for each Pension Scheme
• Comply with investment rules, including maintaining a statement of investment principles and restricting Employer-Related Investments, and notify the Commission where a breach of investment restrictions cannot be remedied or remedying it would cause material detriment to members

Applies to

licensees (holders of a full fiduciary licence), licensed insurers, insurance managers and insurance intermediaries acting as insurance intermediaries, Providers of Pension Schemes, Domestic and International Pension Schemes, retirement annuity trust schemes

Deadlines

• 30 June 2017: Date on which the draft Pension Rules state they would come into operation (as drafted in the consultation text)