RETIREMENT PENSIONS (GENERAL PROVISIONS OF SUPERVISION) REGULATIONS

(GENERAL PROVISIONS OF SUPERVISION)

SUBSIDIARY LEGISLATION 514.09

RETIREMENT PENSIONS (GENERAL PROVISIONS

OF SUPERVISION) REGULATIONS

4th March, 2020

LEGAL NOTICE 50 of 2020.

(1)

The title of these regulations is the Retirement

Pensions (General Provisions of Supervision) Regulations.

(2)

The purpose of these regulations is to implement Articles

19(2), 45, 46, 47, 48(6), 49(2), 50, 51 and 60(1) of the Occupational

Pensions Directive.

(3)

These regulations shall come into force on such date as

the Minister responsible for the regulation of financial services may by

notice in the Gazette establish, and different dates may be so

established for different provisions of these regulations.

(1)

The main objective of prudential supervision is to

protect the rights of members and beneficiaries and to ensure the

stability and soundness of retirement schemes.

(2)

The competent authority shall have the necessary means,

and have the relevant expertise, capacity and mandate to achieve its

main objective of supervision referred to in sub-regulation (1).

The competent authority shall ensure that a retirement

scheme is subject to the prudential supervision including the

supervision of the following, where applicable

(a)

conditions of operation;

(b)

technical provisions;

(c)

funding of technical provisions;

(d)

regulatory own funds;

(e)

available solvency margin;

(f)

required solvency margin;

(g)

conditions relating to the investments of a

scheme;

(h)

investment management function;

(i)

custody function;

(j)

systems of governance; and

(GENERAL PROVISIONS OF SUPERVISION)

(k)

information to be provided to members and

beneficiaries.

(1)

The competent authority shall be responsible for

the prudential supervision of a retirement scheme.

(2)

The competent authority shall conduct its supervision on

a retirement scheme on a forward-looking and risk-based approach.

(3)

Supervision by the competent authority of a retirement

scheme shall be carried out in a timely and proportionate manner and

shall comprise an appropriate combination of off-site and on-site

supervision.

(4)

The competent authority shall apply the requirements laid

down in the Act, regulations and Pension Rules issued thereunder in a

manner which is proportionate to the nature, scale and complexity of

the activities of the retirement scheme concerned.

(5)

The competent authority shall duly consider the potential

impact of its decisions on the stability of the financial system in the

European Union, in particular, in emergency situations.

(1)

The competent authority shall carry on its duties in

a transparent, independent and accountable manner taking into account

the protection of any confidential information.

(2)

The competent authority shall publish the following

information

(a)

the texts of laws, regulations, administrative rules

and general guidance adopted in Malta in the field of

occupational pension schemes and information about whether

Malta has undertaken to exercise the options in terms of Articles

4 and 5 of the Occupational Pensions Directive;

(b)

information regarding the supervisory review

process of an occupational retirement scheme, as set out in

Article 41A of the Occupational Pensions Directive;

(c)

without prejudice to the obligations of

confidentiality and the duty of professional secrecy in terms of

the Retirement Pensions Act, aggregate statistical data on key

aspects of the application of the prudential framework in Malta;

(d)

the objectives of its prudential supervision and

information on its main functions and activities;

(e)

any rules issued by the competent authority and

any laws and regulations on administrative penalties and other

measures applicable to breaches of the Act, regulations and

(GENERAL PROVISIONS OF SUPERVISION)

Pension Rules made thereunder adopted pursuant to the

Occupational Pensions Directive.

When carrying out the supervisory review process of a

Retirement Scheme Administrator or an occupational retirement

scheme in terms of article 41A of the Retirement Pensions Act, the

competent authority shall have in place monitoring tools, including

stress-tests, that enable it to identify deteriorating financial conditions

in an occupational retirement scheme, and to monitor how that

deterioration is remedied.

The competent authority shall, in respect of any

occupational retirement scheme or Retirement Scheme Administrator,

as applicable, have the necessary powers and means to

(a)

require the Retirement Scheme Administrator of

an occupational retirement scheme, or persons who effectively

run the scheme or who carry out key functions, to supply at any

time information about all business matters or to forward all

business documents;

(b)

supervise relationships between the occupational

retirement scheme and other companies, the Retirement

Scheme Administrator and other companies or between

schemes, when the Retirement Scheme Administrator

outsources key functions or any other activities to those

companies or schemes and all subsequent re-outsourcing,

influencing the financial situation of the occupational

retirement scheme or being in a material way relevant for

effective supervision;

(c)

obtain the following documentation

(i)

own-risk assessment;

(ii)

statement of investment-policy principles;

(iii)

annual accounts;

(iv)

annual reports; and

(iv) all other documents necessary for the

purposes of supervision;

(d)

request any document which is necessary for the

purposes of supervision, including

(i)

internal interim reports;

(ii)

actuarial

valuations

and

detailed

assumptions;

(GENERAL PROVISIONS OF SUPERVISION)

(iii)

asset liability studies;

(iv) evidence of consistency with investment-

policy principles;

(v)

evidence that contributions have been paid

in as planned;

(vi)

reports by the approved auditor;

(e)

carry out on-site inspections at the occupational

retirement scheme’s and the Retirement Scheme Administrator’s

premises and, where appropriate, on outsourced and all

subsequent re-outsourced activities to check if activities are

carried out in accordance with the Act, regulations and Pension

Rules issued thereunder;

(f)

request information from the Retirement Scheme

Administrator about outsourced and all subsequent re-

outsourced activities at any time.

The competent authority may restrict or prohibit the free

disposal of the occupational retirement scheme’s assets when, in

particular

(a)

the occupational retirement scheme has failed to

establish sufficient technical provisions in respect of the entire

business or has insufficient assets to cover the technical

provisions;

(b)

the occupational retirement scheme has failed to

hold the regulatory own funds.

The competent authority shall, taking into account the

size, nature, scale and complexity of the activities of the occupational

retirement scheme supervised

(a)

monitor the adequacy of the

occupational

retirement scheme’s credit assessment processes;

(b)

assess the use of references to credit ratings issued

by credit rating agencies as defined in Article 3(1)(b) of

Regulation (EC) No 1060/2009 of the European Parliament and

of the Council, in their investment policies; and

(c) where appropriate, encourage mitigation of the

impact of such references, with a view to reducing sole and

mechanistic reliance on such credit ratings.

The competent authority shall ensure, in an appropriate

manner, the uniform application of the Occupational Pensions

(GENERAL PROVISIONS OF SUPERVISION)

Directive, through regular exchanges of information and experience

with other Member States with a view to developing best practices in

relation to occupational retirement schemes and closer cooperation,

and by so doing, preventing distortions of competition and creating the

conditions required for unproblematic cross-border membership.