The Retirement Pensions Act of 2011 was amended by Act XX of 2013 (the “Act”), and came into force on January 1st 2015.
The Act’s purpose is to regulate retirement schemes, retirement funds and service providers related thereto. By virtue of Part 1 of the Act, the Malta Financial Services Authority (“MFSA”) – established by article 3 of the Malta Financial Services Act – is the competent authority for the purposes of the Act. The MFSA may issue pension rules in accordance with the Act. Such rules will be binding on license holders and/or recognized persons under the Act. The administration of the Act is vested in the MFSA. In addition to this, the competent authority shall perform other functions as the Minister responsible for finance may consider appropriate for the operation of the Act.
On January 7th 2015, the MFSA issued new Regulations and Pension Rules under the Act, with effect from January 1st 2015. The aim of these rules is to supplement the legal framework for the licensing and regulation of retirement schemes, retirement funds, and related service providers. The rules also address the requirement of recognition for persons involved in back-office administrative activities, and include more detailed regulatory requirements by which persons licensed or recognized under the Act are required to comply with.
A set of six legal notices was published in January of 2015 as subsidiary legislation under the Act.
Legal Notice 5 of 2015: Retirement pensions (Transitional Provisions) Regulations (S.L.514.01)
This legal notice imposes the obligation on any person registered in terms of the Special Funds (Regulation) Act, and on any scheme or arrangement, retirement fund, retirement scheme administrator, and asset manager, to apply for a license under the Act within one year from the date of entry into force of the Act. Until such time as a license is granted, the provisions of the Special Funds (Regulation) Act shall continue to apply.
Legal Notice 6 of 2015: Retirement Pensions (Exemption) Regulations (S.L.514.02)
A Maltese IORP is an occupational retirement scheme, licensed by the MFSA, which qualifies as an IORP for the purposes of the Occupational Pensions Directive. This legal notice lays down the persons and entities that are exempt from the licenses under the Act. In addition to this, Legal Notice 6 lists the retirement schemes that do not fall under the Act and as such are not subject to the act’s provisions. The list includes retirement schemes that are established under the Pensions Ordinance, the Police Act, the Prisons Act, and so on.
Legal Notice 7 of 2015: Retirement Pensions (Control of Assets) Regulations (S.L.514.03)
Control of Assets means the holding or control of assets belonging to, or on behalf of, a customer, by a subject person acting in the course of rendering a service under the Act. The definition also includes custody of assets. The “subject person” is a person who is in possession of a license under the Act, or one who is exempted from such license, who controls the assets of a retirement scheme or fund. This also includes a custodian. A “customer” is any retirement scheme or retirement fund whose assets are held under the control of a subject person.
Assets held under the control of the subject person constitute a distinct patrimony from that of the subject person, and distinct from that of any other customer who has assets held under the control of the same subject person. Notwithstanding this control, the customer still enjoys the right of ownership in such assets held by the subject person. These assets are not subject to the rights of the subject person’s creditors. This legal notice also lays down the functions and duties of subject persons, including the duty to safeguard the assets and the interests of the customer. The subject person must also maintain proper and adequate records and accounts of all customers’ assets held under his control. The list contains other duties which ensure the protection of customers’ rights.
Legal Notice 8 of 2015: Retirement Pensions (Defined benefit Retirement Schemes) Regulations (S.L.514.04)
A defined benefit retirement scheme (“DBRS”) is one that has the purpose of providing for the payment of fixed or determinable retirement benefits. This excludes a defined contribution retirement scheme. Every DBRS shall be subject to, and shall comply with, a technical funding requirement as well as with provisions regarding under-provision or over-provision of the technical funding requirement established in terms of these regulations. In accordance with the Act and the Pension Rules issued by the MFSA, every DBRS is to appoint an actuary approved by the MFSA. The retirement scheme is to obtain an actuarial valuation in accordance with the intervals and deadlines stipulated in the Pension Rules. Legal Notice 8 lays down the consequences of an actuarial valuation that shows that the value of the retirement scheme assets is less than the amount prescribed by the Pension Rules, as well as when the value is more than the amount prescribed.
Legal Notice 9 of 2015: Retirement Pensions (European Passport Rights For Institutions For Occupational Retirement Provision) Regulations (S.L.514.05)
The objective of these regulations is to implement, in part, the relevant provisions of the Occupational Pensions Directive (the “Directive”) which shall be interpreted and applied accordingly. A Maltese IORP may accept sponsorship, in terms of the Directive, from sponsoring undertakings located within territories of Member States or EEA States other than Malta. Such Maltese IORP wishing to accept sponsorship, must notify its intention to the MFSA. The MFSA can only grant its approval after it is satisfied that the Maltese IORP meets the conditions described in these regulations. If granted the approval to operate, the Maltese IORP may start to operate the occupational retirement plan sponsored by the sponsoring undertaking in the host Member State in accordance with the host Member State’s requirements of social and labor law. The Maltese IORP shall be subject to ongoing supervision by the European regulatory authority. The Legal Notice also deals with the sponsoring of a European IORP by a sponsoring undertaking located in Malta.
Legal Notice 10 of 2015: Retirement Pensions (Fees) Regulations (S.L.514.06)
Any service provider, retirement scheme or retirement fund that applies for a license or for recognition, shall pay the application fee regardless of whether the application is accepted or rejected. On the date of the granting of the license or recognition, the annual supervisory fee must be paid. The annual supervisory fee must be paid on the same date each year. The established fees are non-refundable and cannot be prorated.