Automatic Enrolment Retirement Savings System Act 2024
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Investment rules | ||
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74. (1) An investment management provider shall invest the resources of each AE provider scheme provided by that provider— | ||
(a) in accordance with the prudent person rule (within the meaning of the Directive of 2016), and | ||
(b) without prejudice to the generality of paragraph (a), in accordance with this section. | ||
(2) When investing the resources of an AE provider scheme, an investment management provider— | ||
(a) shall invest those resources in the best long term interests of the participants on whose behalf units in the scheme are held, and in the case of a potential conflict of interest, shall ensure that the investment is made in the sole interest of those participants, | ||
(b) in accordance with the prudent person rule referred to in subsection (1)(a), shall take into account the potential long-term impact of investment decisions on environmental, social and governance factors, | ||
(c) shall invest the resources of the scheme in such a manner as to ensure the security, quality, liquidity and profitability of the portfolio as a whole, | ||
(d) shall invest the resources of the scheme predominantly in regulated markets and, where there is investment in assets which are not admitted to trading on a regulated financial market, shall keep any such investment to prudent levels, | ||
(e) shall comply with subsection (3) if investing in derivative instruments, | ||
(f) shall invest in such a manner that the resources are properly diversified in such a way as to avoid excessive reliance on any particular asset, issuer or group of undertakings and accumulations of risk in the portfolio as a whole, and | ||
(g) for the purposes of paragraph (f), where the provider invests in assets issued by the same issuer or by issuers belonging to the same group, shall invest in a manner that does not expose the scheme to excessive risk concentration. | ||
(3) Investment by an investment management provider in derivative instruments shall be possible in so far as such instruments contribute to a reduction in investment risks or facilitate efficient portfolio management, and— | ||
(a) they shall be valued on a prudent basis, taking into account the underlying asset, | ||
(b) they shall be included in the valuation of the assets of the scheme, and | ||
(c) the provider shall avoid excessive risk exposure to a single counterparty and to other derivative operations. | ||
(4) For the purposes of subsection (2)— | ||
(a) investment in a collective investment undertaking shall be treated as being invested in a regulated market in accordance with paragraph (d) of subsection (2) and diversified in accordance with paragraph (f) of that subsection to the extent that the investments held by that undertaking are themselves so invested, | ||
(b) investment in an insurance policy falling within the class of insurance specified at paragraph III of Annex II of the Solvency II Directive shall be treated as invested on a regulated market in accordance with paragraph (d) of subsection (2) and diversified in accordance with paragraph (f) of that subsection to the extent that the selection, by the investment management provider concerned, of the investments by which the return on the insurance policy will be determined complies with those paragraphs, | ||
(c) investment in an insurance policy the terms of which provide that the proceeds of the insurance policy at maturity will be equal to or greater than the amount of the investment over the term of the insurance policy, shall be treated as invested on a regulated market in accordance with paragraph (d) of subsection (2) and diversified in accordance with paragraph (f) of that subsection, | ||
(d) investment in an insurance policy of a type to which Article 2(3)(a)(ii) of the Solvency II Directive relates shall be treated as invested on a regulated market in accordance with paragraph (d) of subsection (2) and diversified in accordance with paragraph (f) of that subsection, and | ||
(e) investment in bonds issued by the government of any Member State shall be treated as diversified in accordance with paragraph (f) of subsection (2). | ||
(5) In this section— | ||
“collective investment undertaking” means— | ||
(a) an investment undertaking within the meaning given by section 739B of the Taxes Consolidation Act 1997 , | ||
(b) a unit trust which neither is, nor is deemed to be, an authorised unit trust scheme within the meaning of the Unit Trusts Act 1990 , | ||
(c) an undertaking for collective investment in transferable securities within the meaning given by Directive 2009/65/EC of the European Parliament and of the Council of 13 July 20092 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (recast), situated in any Member State, | ||
(d) a common contractual fund within the meaning of section 739I(1)(a)(i) of the Taxes Consolidation Act 1997 , or | ||
(e) an alternative investment fund within the meaning given by Directive 2011/61/EU of the European Parliament and of the Council of 8 June 20113 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No. 1060/2009 and (EU) No. 1095/2010, situated in any Member State; | ||
“Directive of 2016” means Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 20164 on the activities and supervision of institutions for occupational retirement provision (IORPs) (recast); | ||
“insurance policy” means an insurance policy or contract of assurance issued by any person who is the holder of an authorisation— | ||
(a) granted by the Central Bank of Ireland under the European Union (Insurance and Reinsurance) Regulations 2015 ( S.I. No. 485 of 2015 ), or | ||
(b) granted by the authority charged with the duty of supervising the activities of insurance undertakings in a Member State other than the State in accordance with the Solvency II Directive; | ||
“Solvency II Directive” means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 20095 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (recast). | ||
(6) Subject to subsection (5), a word or expression used in this section or section 75 and in subsection (2), (3) or (5) of section 59AB of the Pensions Act 1990 has, unless the context otherwise requires, the same meaning in this section or section 75 as it has in subsection (2), (3) or (5) of section 59AB of the Pensions Act 1990 . | ||
2 OJ No. L302, 17.11.2009, p. 32 |