Q41A. Are pension scheme trustees and administration service providers likely to be an investment firm carrying on investment services and/or activities?
This is possible, but in many instances it is likely that pension scheme trustees and service providers will either not be providing an investment service or will be exempt under the exemptions in Part 1 of Schedule 3 to the Regulated Activities Order. The following table expands on this in broad terms.
In the table below, ‘investment firm’ means an investment firm as defined in the Regulated Activities Order.
Detailed guidance on investment services and/or activities and the definition of investment firm is in PERG 13.
| Activity | Potential investment activity or service? | Is a trustee or provider an investment firm and is an exemption in Part 1 of Schedule 3 to the Regulated Activities Order available? |
| Dealing in scheme assets as trustee | Execution of orders on behalf of clients | The trustees will not be an investment firm provided they are either not acting by way of business or otherwise are not holding themselves out as persons who provide a dealing service to third parties. This is because the trustees would not be regarded as providing an investment service to third parties on a professional basis In any event, the trustee should be exempt under paragraph 1(j) as manager or depositary (or both) of a pension fund |
| Issuing rights under a stakeholder or personal pension scheme to members | None - the rights are not financial instruments | Not an investment firm |
Pension scheme service provider: a. dealing in scheme assets as agent for the trustees b. arranging deals in scheme assets as agent for the trustees c. arranging for persons to join the scheme or to switch or dispose of, or to acquire further, rights under the scheme | a. Execution of orders on behalf of clients b. Receiving and transmitting orders c. None - the rights are not MiFID financial instruments and neither are any rights to or interests in financial instruments that the scheme member may acquire under the scheme | Will potentially be an investment firm where the investments are financial instruments (such as shares, debt securities or units) However, many pension schemes will be employee participation schemes, the administration of which is exempt under paragraph 1(g) Where the service provider is providing services exclusively for the benefit of a corporate trustee who is a member of its group, the exemption in paragraph 1(c) should apply. And paragraph 1(h) will provide for the exclusions in paragraph 1(c) and 1(g) to be combined where the service provider is both administering an employee participation scheme and providing services to a trustee who is a group member Where the activity is receiving and transmitting orders and the service provider is authorised, the optional intermediaries exemption in regulation 8 of the MiFI Regulations may be available If the service provider is acting as the operator of a stakeholder or personal pension scheme (for example, as the scheme administrator), they should be exempt under paragraph 1(j) as manager of a pension fund |
| Managing the assets of the scheme | Investment management | The trustees will not be an investment firm provided they are either not acting by way of business or otherwise are not holding themselves out as, or additionally remunerated for, providing investment management services. This is because the trustees would not be regarded as providing an investment service to third parties on a professional basis In any event, trustees should be exempt under paragraph 1(j) as manager or depositary (or both) of a pension fund If a service provider is acting as the operator of a stakeholder or personal pension scheme, they should also be exempt under paragraph 1(j) as manager of a pension fund But a service provider who is merely managing the assets of a pension fund without being the manager or depositary of the scheme will not be exempt under paragraph 1(j). The manager and depositary are those persons charged with responsibility for managing the fund or safeguarding its assets and not persons to whom such functions may be delegated or outsourced |
| Safeguarding and administering the scheme assets | None | Safekeeping and administration of investments is an ancillary service |
| Establishing, operating or winding up a stakeholder or personal pension scheme | None | Will not be an investment firm |
a. Pension scheme trustee advising fellow trustees or members or prospective members
b. Pension scheme service provider advising trustees or members or prospective members | Investment advice | Will potentially be an investment service where the advice concerns financial instruments (such as shares, debt securities or units) and so advice given to the trustees about scheme assets may be an investment service or activity. However, beneficial interests in financial instruments held under the trusts of a pension scheme will not themselves be financial instruments. And rights under a personal pension or stakeholder pension scheme are also not financial instruments. So, advice given to scheme members or prospective members about these should not be the investment service of investment advice Trustees who are advising their fellow trustees for the purposes of the trust will not be an investment firm provided they are not additionally remunerated for providing investment advisory services Also, trustees will be exempt under paragraph 1(j) in respect of anything they do in the capacity of manager or depositary of a pension fund (including advising their fellow trustees) If a service provider is acting as the operator of a stakeholder or personal pension scheme, they should also be exempt under paragraph 1(j) as manager of a pension fund if they give advice to the trustees Where the service provider is providing advice to a corporate trustee who is a member of its group, the exemption in paragraph 1(c) may apply (and may be combined with the exemption for administration of an employee participation scheme under paragraph 1(h) where relevant) |
Q41B. [deleted]
Q41C. As a professional trustee of a pension scheme, am I affected by the implementation of the IDD ?
No. A pension scheme trustee may perform tasks on behalf of the other trustees (such as signing proposal forms or giving dealing instructions to insurers or brokers or notifying claims on the death of a scheme member). But that trustee will not be providing an insurance distribution service to them. This is because, under the policy, the trustee will share equal rights and equal responsibility with his co-trustees and so may be regarded as acting solely in the capacity of policyholder rather than intermediary. Also, the pension scheme trustee will not be providing an insurance distribution
service on behalf of the members as the members will not be policyholders.
Q41D. As a pension scheme administration service provider, am I affected by the implementation of the IDD?
You may be. Detailed guidance about the potential effect of the IDD on the normal activities of administration service providers is in Q31 to Q41 and the table in PERG 10 Annex 3.