2. • Section 35 of the Pensions Act
• Governance Regulations 18 - 22
• Prescribed amendments – Section 35 (3) (a), Governance Regulation
18 (1)
• Ordinary amendments – Section 35 (3) (b)
• All amendments need Member approval - Section 35 (2)
• Except amendments required by the Act and Regulations - Section 35
(6)
• Members can approve, refuse, request additional amendments, seek
clarification
Relevant provisions for Amendments
3. • Proposed Amendments submitted to a Participants’ meeting –
Governance Regulation 18 (2), Governance Regulation 19
• Valid quorum of participants’ meeting – 30% (Governance Regulation
5 (3))
• All amendments – must be approved by FSC
• FSC can approve, refuse, or seek clarification
• Is the amendment in the best interest of the fund or scheme
•
Relevant provisions for Amendments
4. • Have a material impact on the pension plan
• Affect the pension promise e.g. Conversion from a DB to DC fund
• Impact solvency of the pension plan
• Change the fundamental nature or design of the pension plan
• Potentially reduce pension rights
• Consolidation, separation or merger of the plan
• Any other circumstance as FSC prescribes
Prescribed amendments
5. • Determination about whether an amendment is a prescribed
amendment
• Actuarial review may be necessary
• Technical comments from Pensions, Actuarial are primary
considerations
• Prescribed amendments require approval of 50% plus 1 of all
membership (section 35 (3) (a))
Prescribed amendments
6. • All amendments which are not ordinary amendments
• Determination made by Pensions
• Ordinary amendments require approval of 50% plus 1 of all voting
members attending meeting (whether in person or proxy)
• Section 35 (3) (b)
Ordinary amendments
7. • Governance Regulation 19 – Trustees’ resolution
• Notice of proposed amendments – at least 14 days before
participants’ meeting; not more than 30 days
• Governance Regulation 18 (2)
• After approval at participants’ meeting, submission to FSC
• Submission within 14 days of the Participants’ meeting – Section 35
(4)
• At least ninety days before the amendments are to take effect –
Section 35 (4)**
Timelines for proposed amendments
8. • Date that the FSC states in the Notice – Governance Regulation 22
• Was the proposed retroactive date communicated to members
• Adequate explanation of impact on their benefits – consumer
protection
• FSC tends to allow retroactive amendments that are beneficial
• Not permissible to retroactively reduce benefits – affects the pension
promise
• Also depends on whether there are fetters/limits in the amendment
power
Effective date of amendments
9. • Review the proposed amendments carefully
• The constitutive documents approved by FSC
• Various iterations of the constitutive documents
• The amendment power in each iteration of the trust documents
• Who has the power to amend the constitutive documents?
• Amendment process – how can the amendments be effected?
Legal review of Amendment Power
10. • Amendment Power – usually given to Trustees
• Amendment Power – Trustees with Employer
• Member approval required – statutory requirement
• Determine whether the Amendment is permissible given the
amendment power in the trust
• Fetters on the Amendment power – practical approach to
interpretation, Stevens v Bell [2002]
Legal review of Amendment Power
11. • Amendment Powers can have certain prohibitions on future
amendments.
• No part of fund to employer in case of a superannuation fund;
• (means no amendments to allow for contribution holiday, surplus
distribution on winding up or partial winding up)
• No reduction on accrued benefits
Limitations/Fetters on the Amendment Power
12. • No amendments that increase responsibilities of Trustees without
their consent
• Amendments must be agreed to by employer in a superannuation
fund
• Tax approval of amendments must be obtained
• In case of a retirement scheme, no surplus on winding up goes back
to sponsor – true DC plan
Limitations/Fetters on the Amendment Power
13. • Examine constitutive documents thoroughly
• Impact on the benefits
• Consequential amendments – would other amendments be required?
• Disclosures to Participants
• Fulsome disclosure – advising of the nature of amendments, see
Governance Regulation 18 (2)
Legal review of the proposed amendments
14. • Determine whether the Amendment is permissible
• Limitations/Fetters on the Amendment power – practical approach,
Stevens v Bell [2002]
• Are the amendments beneficial for the members – technical review
• Is it proposed that the amendments are retroactive
Legal review of Proposed Amendments
15. • Registration – looks at
application
• Pensions technical review
• Actuarial review
• Legal review
• Board approval
• Notice to applicant –
Governance Regulation 22
FSC’s amendment process
• If FSC needs clarification:
• After technical review and legal
review
• Communication to applicant
• Seek clarification
• Meetings etc
• When revised documents
received
• Go through usual process
16. • Adequacy Phase
• Vesting – maximum 5 years from Amendment Act
• Funding & Solvency
• Portability of pension benefits
• Regulation of surplus distribution in an ongoing fund
• Simplification of amendment process
• Permitting multiple membership in retirement schemes and funds
Phase II – Key Proposals to safeguard assets
17. • Partial winding up
• Enhanced investigative powers
• Enhanced enforcement powers
• Registration of sales representatives for retirement schemes
• Financial hardship payments from retirement schemes
• Regulation of advertisements
Phase II
