Trustees and pension schemes in Ireland
| Date | 04 February 2014 |
| Pages | 2-14 |
| Published date | 04 February 2014 |
| DOI | https://doi.org/10.1108/JFRC-12-2012-0051 |
| Author | Jim Stewart,Bridget McNally |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation |
Trustees and pension schemes
in Ireland
Jim Stewart
School of Business,
Trinity College, Dublin, Ireland, and
Bridget McNally
Department of Economics Finance and Accounting,
National University of Ireland, Maynooth, Ireland
Abstract
Purpose – This article aims to highlight the gap between the legal responsibilities and the practice of
pension fund trustees in Ireland.
Design/methodology/approach – The paper relies on primary and secondary data analysis of
trustee practice and enforcement cases to highlight the gap between law and practice.
Findings – The article finds that there is an inconsistency between legal requirement and practice in
the calibre of trustee and trustee training across Irish occupational pension schemes. This has adverse
consequences for pension governance and performance.
Practical implications – The findings raise the question as to whether there should be mandatory
qualifications for trustees or mandatory standardised trustee training in a prescribed format, with
which trustees should comply. It also questions whether there should be a governance code for trustees
to ensure a minimum standard or target level of competence and good governance on the part of pension
scheme trustees.
Originality/value – There is a distinct lack of emphasis in the literature and in practice on the
inconsistency between the extent of the responsibilities which trustees ultimately carry, and the legal
exposure this potentially creates for trustees who unduly rely on other trustees or third parties in the
trustee decision making process.
Keywords Agency issues,Governance of pension schemes, Trusts,Pension provision
Paper type Research paper
Introduction
A trust is a widely used structure in modern commercial activities especially within
the Anglo-American legal systems (Langbein, 1998). This is for a variety of reasons,
for example trusts facilitate complex ownership/beneficiary structures and may also
have favourable tax treatment. Trusts are the common structure for the ownership and
management of occupational pension scheme assets.
This article examines empirical and other evidence on the role and responsibilities of
trustees in defined benefit (DB) pension schemes in Ireland. The paper argues that the
operation of trusts and the calibre of trustees and trustee training poses risks to
pension schemes members in particular during periods of financial stress and regulatory
change. At the same times trustees have been given substantial extra responsibilities
(Pensions Board, 2009, p. 5). Scheme trustees may thus fail to meet the challenges
required and may be exposed to risk from legal challenge in the way in which
responsibilities have been discharged.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
Journal of Financial Regulation and
Compliance
Vol. 22 No. 1, 2014
pp. 2-14
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/JFRC-12-2012-0051
JFRC
22,1
2
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