The role of the FSA and the pensions industry

A pension is the main source of income for many persons at retirement. Having an income during retirement is typically provided through private pension plans. Employer sponsored private pension plans provide an important source of retirement income, not just for employees, but also their families. Employers generally set up pension plans voluntarily; however, of notable mention is that once a pension plan is established, it must be funded and administered in compliance with applicable tax and pension laws.{{more}}

By reason of the Financial Services Authority (“FSA”) Act, No. 33 of 2011, the FSA was given the mandate to regulate and supervise the pensions industry. This mandate involves the registration and regulation of pension plans in accordance with the Insurance Act, Cap 306 of the Laws of St Vincent and the Grenadines, Revised Edition, 2009 (Insurance Act).

The principal objectives of such regulation are:

o to protect the benefits of members of occupational pension schemes;

o to promote and improve understanding of the good administration of occupational pension schemes; and

o to promote compliance with the provisions of the relevant legislation that governs pension fund plans.

In order to achieve these objectives, the FSA must be provided with information for the proper exercise and performance of its duties. Accordingly, registered pension plans must file the following with the FSA:

o Audited annual accounts;

o Any information or return relating to the plan; and

o An actuarial report, every three years.

In St Vincent and the Grenadines, there are currently 24 pension plans registered with the FSA, of which 20 are defined contribution plans, while four are defined benefit plans. It is significant to note, that in order to operate a pension plan, that plan must be registered under the Insurance Act.

The FSA continues to monitor and promote the registration of all occupational pension plans and with continued sensitization of pension plan providers and trustees, it is anticipated that there will be additional plans registered.

A critical component in building a stable industry and protecting pension plan beneficiaries is for trustees and their agents, such as administrators and investment managers, to operate in an ethical manner, by faithfully discharging their fiduciary and other responsibilities.

The overall strengthening of the industry’s standards and modus operandi is an ongoing process that will be continuing under the guidance of the FSA. In this regard, the FSA is in the process of introducing guidelines setting out the roles and responsibilities of trustees and administrators and general information that should be made available to plan members. The single market for insurance and pensions under the proposed regional regulatory body for Insurance and Pensions, the Eastern Caribbean Financial Services Regulatory Commission (“ECFSRC”), will also guide further developments of the sector.

The FSA intends to fully engage stakeholders and the industry in this process, as it seeks to enhance the regulatory and supervisory landscape for pension fund plans.

Submitted by:

Financial Services Authority