RSE licensees that are part of a group[7RSE licensees that are part of a group[7]

RSE licensees that are part of a group[7]

9. Where an RSE licensee is part of a corporate group, and the RSE licensee utilises group policies or functions, the Board of the RSE licensee (the Board[8]) must approve the use of group policies and functions and must ensure that these policies and functions give appropriate regard to the RSE licensee’s business operations.[9]

Shortfall limit

10. An RSE licensee must set a shortfall limit, approved by the Board, for each defined benefit fund within its business operations.[10] For the purposes of this Prudential Standard, a ‘shortfall limit’ is the extent to which an RSE licensee considers that a fund can be in an unsatisfactory financial position with the RSE licensee still being able to reasonably expect that, because of corrections to temporary negative market fluctuations in the value of fund assets, the fund can be restored to a satisfactory financial position within one year.[11]

11. The shortfall limit may be set so there is zero deviation from a satisfactory financial position. The shortfall limit must not be such that that the fund may become technically insolvent as referred to in regulation 9.06(3) of the SIS Regulations before breaching the shortfall limit.

12. The shortfall limit approved by the Board must be calculated and expressed in the same way as required under the reporting standards made under the Financial Sector (Collection of Data) Act 2001.[12]

13. The Board must determine and implement a monitoring process designed to detect, on a timely basis, when the fund has, or may have, fallen into an unsatisfactory financial position and/or breached the shortfall limit.