IORP II - Continuing to do business with Zurich

IORP II brings implications for both the establishment of new employer pension schemes and for existing pension schemes. A transition timeframe has been published by the Pensions Authority which allows for a limited period of grace for employers and trustees on some existing pension schemes. The transition timeframe gives time to adapt to the new requirements and become compliant with the new IORPs II regulations.

Doing business with Zurich – a range of trustee models

We wanted to communicate with you today to assure you that you can continue to place new schemes or have existing schemes with Zurich through any one of the four trustee models which we have set out below. We will also shortly be inviting you to attend a webinar on IORPs and its implications for Zurich so please keep an eye out for the invite.

1. Choosing Zurich Trustee Services Limited (ZTSL) to act as trustee

Choosing ZTSL to act as trustee offers an efficient and effective solution for employers, advisors, and the scheme members. It ensures that you and your customers will not need to worry about having to deal with the significant additional governance requirements of IORP II.

ZTSL, Zurich’s own trustee company, is one of the largest and most experienced trustee companies operating in Ireland, with an excellent track record and reputation.

ZTSL already operates to the standards expected under IORP II. It has a detailed governance framework to which it actively adheres and has a comprehensive service agreement in place with Zurich which facilitates influence over the registered administrator. ZTSL’s risk management tool ensures that risks are identified, profiled, mitigated, and measured on an ongoing basis, and ZTSL is already subject to internal audit and risk management review.

Most employers and advisors choose ZTSL to act as trustee when placing schemes with Zurich. If this approach works best for you and your customers, then you can continue to engage ZTSL as trustee.

2. Appoint a professional trustee

The engagement of an independent professional trustee by the employer is another option which continues to exist under IORP II and an option which Zurich will continue to facilitate. There are many specialist professional trustees operating in the Irish market, most of whom we work closely with already and we will continue to do so into the future.

3. Lay trustee board

Some employers especially large employers prefer to have a lay trustee board comprising of individuals – usually senior executives from the employer organisation - who have good insights into the scheme membership and the employer.  If any employer wants this option or already operates on this model, they can do so with Zurich.

As the scheme advisers, you should remind them that IORP II brings changes to the way in which they must operate and indeed to the level of competencies which they must collectively have. Zurich will be happy to support you through engagement and meetings with you and your customers to outline the additional steps which they may need to take to satisfy the requirements set out under IORP II.     

4. Zurich Master Trust – coming soon

We will have the Zurich Master Trust available to you also in the near future, and we will provide you with more details on our Master Trust in the coming months. A Master Trust is in effect, one large scheme established under trust to which any employer can affiliate – employers do not have to be connected to one another in any way. We expect that ZTSL will act as trustee to our Master Trust. This means that in essence, whether you chose the Zurich Master Trust option or chose ZTSL to act as trustee of a single trust scheme, there will be little difference from an adviser’s perspective in dealing with us on an ongoing basis. 

We are continuing to review the detail of the IORPS II transposition and its far-reaching implications and will provide further information and guidance as more information becomes available.

One-member Executive Pension Plans 

In relation to new one-member Executive Pension Plans (EPP’s) we recommend that you carefully consider whether to continue writing new business with the employer acting as trustee. It may be better to choose ZTSL as trustee for all your new cases.

The Pensions Authority have indicated that they expect EPP to comply in full with the requirements of IORP II from July 2022. This will be challenging or indeed impossible for new one-man schemes where the employer is trustee.

ZTSL can act as trustees on new EPP cases (other than Self Directed cases) and we recommend this approach.  It would be a much easier option for new EPPs from now on.

Property Fund – Occupational / Company Pension Schemes

IORPs II also imposes restrictions on certain types of investments – so, with immediate effect, contributions, top-ups, redirections or switches are subject to a maximum of 50% invested into the Zurich Property Fund for Occupational / Company Pension Schemes.

You should note that existing holdings in the Property fund are not impacted and these restrictions do not apply on other products:

• Personal Pension Plans/Retirement Annuity Contracts
• Personal Retirement Bonds/Buy-out Bonds
• Personal Retirement Savings Accounts
• Approved Minimum Retirement Funds /Approved Retirement Funds

Of course, if you are looking for an alternative to a trust based arrangement, PRSAs are a suitable pension product for many customers, where their contributions (plus those of their employer) are within the relevant limits. PRSAs provide a simpler structure than trust based arrangements, and Zurich offers a market leading range of PRSA products, including self-directed options.

Thank-you for your support

We appreciate the continued support from Financial Brokers and Advisers during this difficult and challenging time; we understand the importance of pensions and pension coverage for your clients.

We believe that pensions represent the best products for long term retirement saving. With Zurich and ZTSL we have a strong and robust pensions and trusteeship offering for you and your clients. We want to help as much as we can by building on this relationship and providing all the necessary support and guidance as we head into this new chapter of pensions in Ireland.