The Pensions Authority in Ireland has issued an alert on the involvement of third party providers in Personal Retirement Savings Accounts (PRSA) and plans to conduct a compliance exercise on providers in 2021.
In a statement, the authority said it has come to its attention that some PRSA providers may be operating their PRSA products in a manner which requires the contributor to enter into an additional or parallel contractual arrangement with a third party service provider. As a result, it will be conducting a compliance exercise on providers in the first quarter of 2021.
“Pursuant to section 102 of the Pensions Act, 1990, as amended, a PRSA contract is entered into between the PRSA provider and the contributor. Additional or parallel contracts between the PRSA contributor and third parties are not consistent with a compliant PRSA contract or product,” the authority stated.
A PRSA is a long-term personal pension plan that was first introduced in Ireland under the Pensions (Amendment) Act 2002. Since 2003 employers that do not have an occupational pension scheme for their employees must provide access to at least one Standard PRSA.
In its warning, the authority said that the provision of services necessary to the PRSA, including contribution processing and investment, must be included in the PRSA contract and not in any separate arrangements.
“For the avoidance of doubt, PRSA charges should include any charges that arise through the use of third party service providers and must be expressed in line with the requirements of section 104 of the Act,” it stated.
With regards to the review the authority will undertake in 2021, it said that providers who are found to be operating their PRSA products in a manner which requires the contributor to enter into an additional or parallel contractual arrangement with a third party service provider and have not engaged with the authority, may be subject to sanctions.
“The authority expects PRSA providers operating in this manner to take the necessary steps to rectify the matter as soon as possible,” it stated.
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