Tesi Johnson, Gleaner Writer
Robin Ellison, the author of 'The Pension Trustees' Handbook' and main speaker at the WITCO Pension Fund Seminar, held at the Knutsford Court Hotel February 16 2006. - CONTRIBUTED
CURRENTLY, UNDER the Pensions Act 2004 that was brought into force March 1, 2005, trustees who fail to meet reporting requirements commit a criminal offence attracting a fine or a prison sentence upon conviction.
The sanction raised much concern among trustees and other parties. As explained by Mr. Brian Wynter, the executive director of the Financial Services Commission (FSC) at a Pension Fund seminar staged by the West Indies Trust Company (WITCO) last week, that was one of a number of concerns that were raised in the Senate that have prevented the approval of the regulations. This resulted in an extended delay in fully implementing that phase of pensions reform.
APPROPRIATE REQUIREMENTS
Mr. Whynter said that the time has been well used as the FSC and the Ministry of Finance have engaged in close dialogue with the parties who expressed concerns before the Senate. This dialogue has led to a number of changes to the Regulations, one of which is the alteration of that particular regulation that relates to the liability of trustees.
"The last 11 months have seen a deliberate effort to deepen broad-based consensus on the appropriate requirements for pensions reform as it relates to the responsibilities and obligations of various stakeholders involved in the governance, administration and investment of pension funds," he said.
The concerns of pension trustees regarding criminal liability have since been quelled, as "arising from the discussions held, it is intended that where breaches of the Act would constitute offences on the part of the trustees, the Act would be amended so that failure to comply would not constitute an offence under the Act", explains Mr. Wynter.
One significant reason for making the alteration was the fear that individuals may not volunteer to serve as trustees and those acting in the role will decline to continue to do so if they are put at risk of action being taken against them if things go wrong. Nonetheless, trustees must still answer for mishaps in fund management, as the Act seeks to create accountability to an independent body, which in this case would be the FSC. Furthermore, they would still be liable to civil suits, and the usual punishments still apply in cases of fraud.
In his presentation, Robin Ellison, a pensions attorney with a U.K. law firm and author of The Pension Trustees' Handbook, revealed that similar action has been taken in the U.K. to increase liabilities for trustees. He however noted that, "controls for trustees need not be as rigid as those for other financial entities like banks because trustees rarely, if ever, steal money from pension funds under their care." This addresses the imperative for the sector to be regulated, but Mr. Ellison suggested that Jamaica should not complain about its pensions sector because elsewhere, particularly the U.S.A. and the U.K., it is much worse.
As Mr. Ellison describes it, the U.K. sees two or three new regulations every week! So Jamaica's situation is far from being complicated. Nonetheless, the financial community should welcome regulation of the pensions sector but be careful not over regulate and frustrate the process - an allusion to the harsh penalties that were originally tabled for trustees if certain problems arose with the fund under their care. "We don't want a situation where people don't want to become trustees", he said.
