Section 48 of the Pensions Act sets out the priorities on winding up a scheme. It sets out the order in which the liabilities must be discharged and how they may be discharged for members. When a scheme winds up, section 48(3)(b) provides that the trustees may, notwithstanding anything contained in the rules of the scheme and without the consent of the member concerned, discharge the liability for benefits payable by any member by one of the following: transferring the benefits of each member into a new pension scheme; purchasing an approved assurance policy with a company or insurance agency that sells life insurance; or transferring the benefits into another arrangement for the provision of retirement benefits such as, for example, a PRSA or a buyout bond. It must be noted that this is a discretionary provision and the trustees are not compelled to discharge the liability in this way.
The wind-up options in section 48(3)(b) are contingent on the requirement that the scheme’s policies or contracts are approved by the Revenue Commissioners under the Taxes Consolidation Act 1997, as amended. That Act sets out the circumstances in which retirement benefit schemes are approved by the Revenue Commissioners for tax purposes.
In other words, transfers from the scheme being wound up must be made into schemes or products approved by the Revenue Commissioners and which, therefore, comply with Revenue rules.
Section 772 of the Taxes Consolidation Act allows for flexible options on retirement, i.e., the approved retirement fund (ARF) option. The purchase of an ARF is not available to members of defined benefit schemes, subject to certain exceptions. Legislation and policy on taxes and access to ARFs are a matter for the Department of Finance.
ARFs are post-retirement investment vehicles but the sale of ARFs is not currently regulated as a pension product. Under Strand 3 of the ‘Roadmap for Pensions Reform’ the Government has committed to undertaking a broad review of the utilisation of the ARF option and consider whether regulatory oversight of this product is fit for purpose. This review will be undertaken by the Interdepartmental Pensions Reform and Taxation Group (IDPRTG) which aims to have it completed by the end of this year. The IDPRTG is chaired by the Department of Finance and includes the Department of Public Expenditure and Reform as well as my Department.
I hope this clarifies the matter for the Deputy.