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(CNS): Cabinet has approved a new commencement order that will bring most of the outstanding parts of the National Pensions (Amendment) Act into force this year, some seven years after the law was passed. The provisions pave the way for more transparency and accountability on the part of the pension providers, naming and shaming of rogue employers, as well as providing for higher fines and even imprisonment for bosses who don’t make the mandatory contributions for their staff.
Director of Labour and Pensions Bennard Ebanks said the rollout would fortify the pensions regime. “Non-compliant employers will be held more accountable, members will be provided with greater information, administrators’ responsibilities will be increased and the Department of Labour and Pensions will be strengthened,” he said.
The commencement of the rest of the law is still being phased, with some of the new rules relating to the introduction of mandatory Annual General Meetings (AGMs) and twice-yearly statements for members already in effect from 1 January. On 1 March the introduction of higher fines will be rolled out as well as the requirement for pension firms to publish a list of all registered plans, administrators and agents.
Labour Minister Chris Saunders, who has responsibility for pensions, has previously criticised the pension regime for private sector workers and suggested it is inadequate and not fit for purpose. While he was in opposition he said that having nine providers for such a small workforce was a “ridiculous system” that needed a complete overhaul.
However, since taking up office just under two years ago, Saunders has not provided any specific plans for any major changes. But he said the commencement of the outstanding sections of the National Pensions (Amendment) Act passed in 2016 was long overdue.
“It’s important that pension providers educate their members on the pension plans they are entered into and for employers to remain in compliance with the regulations that guide them,” he said in a press release. “The National Pension Act was enacted for the benefit of employees and these changes were made to increase transparency and members’ engagement. It is therefore important that employees take the time out to understand their pension plans to better plan for their future.”
Outlining the changes, officials said that all pension plan administrators (PPAs) will now be required to host annual general meetings (AGMs) and provide members with statements twice per year. These changes allow all members to attend meetings with their pension providers to learn more and discuss concerns. The increase in statement frequency will provide more up-to-date information on expense ratios and investment returns on plans as well as the payment record of members’ employers.
In March, the requirement to publish a list of all registered pension plans, their PPAs, agents and key service providers will be rolled out, giving the general public an official list of registered pension plans so they can verify their plans. New provisions will enable the court to impose higher fines and possibly imprisonment for convicted employers. Officials said this follows comments from magistrates in open court that stronger penalties were needed for employers to take such offences seriously.
Then from 1 July, PPAs will be required to notify employees of a delinquent employer, within 60 days of notifying the government, in addition to a new obligation to collect interest on delinquent contributions and take action when an employer is delinquent, including contacting the employer or employees. If it is not resolved, then the administrator will be obligated to report it to the Department of Labour and after 60 days to notify the affected employees. PPAs will also be able to publish the names of the employers.
The DLP will at that time be able to demand the appearance of a delinquent employer in order to address the pension arrears and will also have the authority to publish breaches under the National
Pensions Act. These provisions are added to the ongoing ability to establish payment plans and
prosecute employers for offences.
In October, an Administrative Penalty System will be introduced that will create another enforcement tool similar to other departments with an enforcement mandate, officials explained. The requirement for ongoing training for PPAs will also be introduced. All new and ongoing PPAs will be required to provide the DLP with supporting evidence of their training on the management, administration and investment of the pension plan. Training on the National Pensions Act as well as the PPAs fiduciary duties will also be required.
The department said that the remaining few provisions of the legislation are to be implemented in a phased approach, after the review of the existing National Pensions (Pension Fund Investments)
Regulations. Future amendments or changes will require Cabinet approval before implementation.
See the National Pensions (Amendment) Act and the Commencement Order here.
For more information call 945-8960 or email dlp@gov.ky.
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