Ireland’s European Union (EU) (Supplementary Pensions Rights) Regulations 2019 came into force 13 Sep 2019 and provide certain rights to members or prospective members of the pension scheme if they have changed or may change employers in EU member states. The rights arose due to the transposition into Irish law of the EU Portability Directive 2014/50/EU, which was designed to make moving between EU employments easier in light of the EU’s principle of freedom of movement. The rights override any conflicting provisions in the rules of the pension scheme. The Pensions Authority issued guidance on the regulations in November 2019.
The regulations apply only to schemes which accept new members on or after the date the Directive came into force (20 May 2014). They created the concept of an “outgoing worker” who moves between EU employments and effectively introduced a new ring-fenced membership status. In broad terms, an outgoing worker is either:
─ Was already determined to be an outgoing worker when service commenced (as defined above), or
─ Whose next employment after leaving is in another EU member state
The new regulations represent a material change in how defined contribution occupational pension schemes have operated in Ireland and are likely to present some challenges with respect to identifying outgoing workers and ensuring their rights are protected in the scheme.
While the Pensions Authority’s guidance note does provide some suggestions for employers and trustees with regard to fulfilling their legal obligations, this guidance is limited and does not address all of the practical issues that could arise.
Perhaps most importantly, the legal obligation for determining whether or not an employee or former employee is provided with any entitlements under the regulations falls on the employer and the trustees. It is not up to individual employees or former employees to initiate this process, though they will be required to engage with the process.
Administrative processes must be adapted, by employers and the scheme, to ensure that current and prospective employees are asked the appropriate questions when they join or leave service. This will ensure their status is correctly determined and recorded, and the correct tax relief applied to refunds.
To help employers identify who is currently within the scope of the regulations and adopt appropriate procedures with respect to employees who may fall within the scope in the future, the following steps are recommended: