National Pension Scheme (General) Amendment Regulations (No.2) 2000

Link to law: http://www.bermudalaws.bm/Laws/Annual%20Laws/2000/Statutory%20Instruments/National%20Pension%20Scheme%20%28General%29%20Amendment%20Regulations%20%28No.2%29%202000.pdf

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National Pension Scheme (General) Amendment Regulations (No.2) 2000
NATIONAL PENSION SCHEME (GENERAL) AMENDMENT
REGULATIONS (NO.2) 2000


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BR 70/2000

NATIONAL PENSION SCHEME (OCCUPATIONAL PENSIONS)
ACT 1998

1998 : 36

THE NATIONAL PENSION SCHEME (GENERAL) AMENDMENT
REGULATIONS (NO. 2) 2000




The Minister in exercise of the powers conferred upon him
by section 69 of the National Pension Scheme (Occupational Pensions)
Act 1998, makes the following Regulations:⎯

Citation
1 These Regulations which amend the National Pension Scheme
(General) Regulations 1999 may be cited as the National Pension Scheme
(General) Amendment Regulations (No. 2) 2000 .

Inserts new Part V in National Pension Scheme (General) Regulations
1999
2 The National Pension Scheme (General) Regulations 1999 are
amended by inserting next after Part IV the following new Part—

" PART V

PENSION FUND INVESTMENTS

Interpretation
25 In this section—

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REGULATIONS (NO.2) 2000


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"market value" means the most probable price that
would be obtained for property in an arm's length
sale in an open market under conditions requisite to
a fair sale, the buyer and seller acting prudently,
knowledgeably and willingly;

"mutual fund" means a company limited by shares, or
other company having a share capital and
incorporated for the purpose of investing the moneys
of its members for their mutual benefit and having
the power to redeem or purchase for cancellation its
shares without reducing its authorized share capital
and stating in its memorandum that it is a mutual
fund;

"traded publicly' means listed or quoted on the Bermuda
Stock Exchange or any other market on which
securities are listed or quoted if the prices at which
they have been traded or quoted on that market are
regularly published in a newspaper, or business or
financial publication, which is of general circulation
and for which regular payment is required;

"unit trust scheme" means any arrangements made for
the purpose, or having the effect, of providing, for
persons having funds available for investment,
facilities for the participation by them as beneficiaries
under a trust, in profits or income arising from the
acquisition, holding, management or disposal of any
property whatsoever;

"security" means any document, instrument or writing
commonly known as a security and includes—

(a) a share of any class, a series of shares or a debt
obligation of a company;

(b) a certificate evidencing such share or debt
obligation; and

(c) a warrant;

"voting share" means—

(a) a share of any class of shares of a company that
carries voting rights under all circumstances;
and

(b) a share of any class of shares of a company that
carries voting rights by reason of the occurrence
of any contingency where that contingency has
occurred and is continuing; and

NATIONAL PENSION SCHEME (GENERAL) AMENDMENT
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"warrant" means any warrant or other instrument
entitling an investor to subscribe for any of the
following investments—

(a) shares;

(b) debentures.

Duties of administrator
26 (1) The administrator shall, subject to paragraph (2),
giving consideration to the overall context of the investment
portfolio, ensure that the selection of investments is such as to—

(a) avoid undue risk of loss or impairment; and

(b) create a reasonable expectation of fair return or
appreciation.

(2) Paragraph (1) shall not apply to that part of a
pension fund in which a member of a pension plan makes his
own decisions regarding the selection of investments.

(3) Where it is reasonable and prudent in the
circumstances so to do, the administrator of a pension plan may
employ one or more agents to carry out any act required to be
done in the administration of the pension plan and in the
administration and investment of the pension fund.

(4) An administrator of a pension plan who employs an
agent shall personally select the agent and be satisfied as to the
agent's suitability to perform the act for which the agent is
employed, and the administrator shall carry out such
supervision of the agent as is prudent and reasonable.

(5) An employee or agent of an administrator is also
subject to the standards that apply to the administrator under
section 7(2) of the Act.

(6) The administrator of a pension plan is not entitled
to any benefit from the pension plan other than pension benefits,
ancillary benefits, a refund of contributions and fees and
expenses related to the administration of the pension plan or
otherwise permitted under a law in force in Bermuda or provided
for in the pension plan.

(7) Paragraph (6) applies with necessary modifications
to a member of a committee or board of trustees that is the
administrator of a pension plan and to a person or group of
persons or an entity which by virtue of this Act or any other law
is vested with responsibility for the administration of a pension
plan or pension fund.

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(8) An agent of the administrator of a pension plan is
not entitled to payment from the pension fund other than the
usual and reasonable fees and expenses for the services provided
by the agent in respect of the pension plan.

Investment policies and goals
27 (1) The administrator of a pension plan shall, subject
to paragraph (4), establish and maintain a written statement of
investment policies and goals.

(2) The statement of investment policies and goals
shall be reviewed by the administrator annually and shall be
confirmed or amended by him.

(3) The statement of investment policies and goals
referred to in paragraph (1) shall identify the type of pension
plan, the nature of the liabilities of the pension plan and shall
contain guidelines that at least set out—

(a) the investment portfolio diversification including
the aggregate and individual investment limits;

(b) the asset mix policy and rate of return
expectations;

(c) the categories and sub-categories of investments
that may be made;

(d) the policy to be followed where there is an actual
or perceived conflict of interest on the part of the
administrator, a member of a committee or
board of trustees or any employee or agent of
the administrator;

(e) minimum disclosure requirements with respect
to an actual or perceived conflict of interest
including the timing of the disclosure;

(f) the lending of cash or securities;

(g) the retention or delegation of voting rights
acquired through pension plan investments; and

(h) the basis for the valuation of investments that
are not regularly traded.

(4) Regulation 27 shall not apply where a member of a
pension plan makes his own decisions regarding the selection of
investments.

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Defined contribution pension plan
28 The administrator of a defined contribution pension plan
shall ensure that a reasonable range of investments is offered
and that a member is given enough relevant information to allow
the member to make an informed decision regarding his
investment in the plan.

Requirements for pension fund investment
29 (1) Subject to paragraph (3), the administrator of a
pension plan shall ensure—

(a) that all bank certificates or deposits in which
the pension fund has invested do not exceed—

(i) one percent of the issuing bank's or deposit
company's total shareholder equity; or

(ii) five percent of the issuing bank's
shareholder equity if the bank is a licensed
bank or licensed deposit company in
Bermuda and if the approval in writing of
the Commission has previously been
obtained;

(b) that guaranteed investment certificates in which
the pension fund may invest are issued by an
insurance company or companies rated by an
internationally recognized credit rating agency at
grade A or higher.

(2) The percentage of the total market value of a
pension fund that may be invested in the securities of any single
company, person, association or other entity shall not exceed ten
percent of the total market value of the pension fund at the time
the investment is made.

(3) Paragraph (2) does not apply to—

(a) deposits held with a licensed bank or licensed
deposit company in Bermuda;

(b) government issues, bonds, or debentures, that
are rated A or higher by Moody's or Standard &
Poor's rating agencies;

(c) an insurance contract approved by the
Commission; or

(d) investments in open-ended mutual funds or
units in a unit trust.

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(4) In determining the percentage of shareholder equity
under paragraph (1) (a), the most recently published balance
sheet shall be used.

Mortgages, etc.
30 The funds of a pension plan shall not be loaned on the
security of a mortgage or other security agreement on real estate
or leaseholds where the amount paid for the mortgage or
agreement, together with any prior or equal ranking
indebtedness, exceeds sixty percent of the market value of the
real estate at the time the loans were approved.

Assets of pension fund
31 Unless otherwise permitted by these Regulations, a
pension plan shall not pledge or mortgage the assets of the
pension fund.

Borrowing
32 An administrator of a pension plan shall not borrow on
behalf of the pension fund without the prior approval of the
Commission.

Investment in real estate
33 Investment by a pension fund in real estate shall at the
time the investment is made be limited to a maximum of five
percent of the total market value of the pension fund's assets
directly in any single parcel of real estate.

Conflict of interest
34 An administrator or, if the administrator is a committee
or a board of trustees, a member of the committee or board that
is the administrator of a pension plan, shall not knowingly
permit the administrator's interest to conflict with the
administrator's duties and powers in respect of the pension
fund.

Prohibited investments
35 (1) The assets of a pension fund shall not be loaned to
or, except where securities are traded publicly, invested in the
securities of,—

(a) the administrator, or an officer, director, agent
or employee of the administrator;

(b) a person responsible for holding or investing the
assets of the pension fund or any officer of
employee of that person;

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(c) a trade union representing members of the
pension plan or an officer or employee of that
trade union;

(d) an employer and, where the employer is a
company, officers, or directors of the company;

(e) where the employer is a company—

(i) any shareholder who owns directly or
indirectly more than ten percent of the
voting shares of the company; or

(ii) an affiliated company;

(f) the spouse or child of any person referred to in
paragraphs (a) to (e); and

(g) operations wholly-owned or controlled either
directly or indirectly by a person referred to in
paragraphs (a) to (f).

(2) The assets of a pension fund shall not be loaned, or
otherwise used, in any securities lending schemes or
arrangements except where the loans, or other use, are secured
by cash or readily marketable investments having a market
value of at least 105 percent of the loan, or other use, and
maintained on a daily mark-to- market basis to ensure a market
value of the collateral of at least 105 percent of the outstanding
market value of the assets.

(3) For the purpose of this regulation, one company is
affiliated with another company only if one of them is the
subsidiary of the other or both are subsidiaries of the same
company or each of them is controlled by the same person

(4) For the purposes of this regulation, a company is a
subsidiary of another company only if⎯

(a) it is controlled by⎯

(i) that other company; or







(ii) that other company and one or more
companies each of which is controlled by
that other company; or

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(iii) two or more companies each of which is
controlled by that other company; or

(b) it is a subsidiary of a subsidiary of that other
company.

(5) For the purposes of this regulation, a company is
controlled by another company or person or by two or more
companies only if⎯

(a) shares of the first-mentioned company carrying
more than fifty per cent of the votes for the
election of directors are held, otherwise than by
way of security only, by or for the benefit of that
other company or persons or by or for the
benefit of those other companies; and

(b) the votes carried by such shares are sufficient, if
exercised, to elect a majority of the board of
directors of the first-mentioned company.

(6) this regulation does not apply to deposits or
guaranteed investment certificates.

Assets, etc. to be in name of pension fund
36 All assets of a pension fund shall be held in the name of,
or for the account of, the fund.

Acceptance of bonds, etc. by pension fund
37 Where a pension fund owns investments in a company
and, as a result of arrangements for the reorganisation or
liquidation of the company, or for the amalgamation of the
company with another company, the investments are to be
exchanged for bonds, debentures or other evidences of
indebtedness, or shares that result in the limitations set out in
this Part being exceeded, the pension fund may accept and hold
such bonds, debentures or other evidence of indebtedness or
shares for a period not exceeding one year unless approved by
the Commission.



NATIONAL PENSION SCHEME (GENERAL) AMENDMENT
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Transitional
38 A pension plan that was established, and was in effect
before 1 July 2000 shall comply with this Part by 1 September
2001".



Dated this 13th day of September, 2000





Minister of Finance