Several developments have occurred in pensions law and regulation in recent months, which impact on trustees in important ways. Some have been prompted by the EU Directive on Activities and Supervision of Institutions for Occupational Retirement Provision ("IORPS"), while others reflect ongoing policy reviews in Ireland. This article outlines the key developments that came into force on 23 September 2005.

General
The key developments include:

• trustees: the trustees must appoint an authorised investment manager, or at least one trustee must have investment-related qualifications and experience that are satisfactory to the Pensions Board;

• members' investment choice: if provided for in the scheme rules, trustees must enable members to make informed investment decisions, and compile a default investment strategy to apply in the event that no choice is made by a member. When trustees comply with the prescribed conditions, they cannot be liable solely by reason of giving effect to the members' directions;

• investment principles: trustees' investment duty now includes an obligation to ensure that investment by a scheme accords with the "prudent person" rule, and associated principles, eg. relating to borrowing, trading on a regulated market, diversification and the use of derivatives. In many schemes, the statement of investment principles must be prepared. Although previous borrowings need not be unwound, effective 23 September 2005, trustees will only be permitted to borrow for liquidity purposes and on a temporary basis. Single member defined contribution scheme trustees may borrow if the member has discretion how to invest scheme resources;

• disclosure: important new disclosure requirements have been introduced, relating to the accounts of a scheme, annual reports, scheme valuations and benefit statements. The trustees of a defined contribution scheme will be required to produce annual accounts if the scheme has at least 100 active and deferred members. All schemes with more than 100 active and deferred members must produce full trustee annual reports. Schemes below that limit may instead produce alternative reports without accounts. Trustees must include in their annual report a statement about the financial, technical and other risks associated with the scheme and the nature and distribution of those risks, unless already disclosed as part of the basic information about the scheme. Actuarial valuations of many types of scheme must now take place more frequently. From 1 January 2007, trustees of defined benefit and defined contribution schemes will have to provide active members with annual benefit statements (containing prescribed information) annually. Currently, such statements are prepared on request.

Cross-border schemes
New rules have been introduced to facilitate Irish-registered pension schemes to operate across borders within the EU, ie. with some members of the Irish scheme being based in a Member State other than Ireland. Detailed procedures must be followed by an employer that wishes to do so (including obtaining authorisation from the Pensions Board), and some aspects of the arrangements have yet to be finalised, eg. rules and procedures to deal with any risk of under-funding. Similar arrangements are being applied in the event that an Irish employer wishes to contribute to a scheme that is based in another Member State.

The EU Commission has determined that schemes approved under the Ireland/UK reciprocal arrangements need to be approved as cross-border schemes.

These developments, together with others that are due to come into effect in 2006 and which will be considered in a future edition of Legal Update, have increased significantly the level of professionalism that the law and regulators expect of pension fund trustees.