The Assisted Decision-Making (Capacity) Act: Considerations for Pension Schemes
The Assisted Decision-Making (Capacity) Act 2015 1 (the “Act”) finally came into effect on 26 April 2023, having been first enacted in December 2015. While the Act will have general implications for how the capacity of individuals is assessed, in this briefing we highlight what trustees and administrators of pension schemes need to be aware of in dealing with beneficiaries.
All adults are presumed to be autonomous and to have capacity for all purposes. However, the law recognises the need to protect vulnerable adults from exploitation or harm where they are at risk. What the Act seeks to establish is a respectful and robust legal framework for supported decision-making. This is primarily achieved through the introduction of a function-centric capacity assessment, the establishment of the Decision Support Service, and the amendment and replacement of existing decision-making arrangements.
Various Irish stakeholders should familiarise themselves with this new system, in particular trustees and administrators of pension schemes, who owe fiduciary duties to their beneficiaries. Capacity issues may arise in respect of very elderly pensioners, who reach an age where conditions involving cognitive decline are common. These fiduciary duties require, among other things, that benefits are paid to beneficiaries, that assets are safeguarded, and that trustees and administrators act with care and in the best interests of their beneficiaries. If a trustee or administrator were to accept instructions from a beneficiary lacking capacity or someone purporting to act on a beneficiary’s behalf without appropriate legal authority, they might fail to fulfil these fiduciary duties. It is vital that trustees and administrators acquaint themselves with the Act and establish protocols and procedures to ensure statutory compliance and the fulfilment of their fiduciary duties.
Section 3 of the Act requires that a person’s capacity is construed functionally. This is achieved by assessing “the basis of his or her ability to understand, at the time that a decision is to be made, the nature and consequences of the decision to be made by him or her in the context of the available choices at that time.”2 Trustees and administrators should make this assessment before accepting instructions from a beneficiary whose capacity is in question. The Act also introduces helpful guidance on when an individual is considered to have capacity and circumstances in which an individual is considered not to have capacity. Going forward, this guidance will be of particular assistance to trustees and administrators when assessing beneficiary capacity.
Decision Support Service
Part 9 of the Act establishes the Decision Support Service, which will promote public awareness of the Act and supervise compliance. As well as holding a supervisory role, the Director of the Decision Support Service (the “Director”) may, in certain circumstances, make property related decisions in respect of individuals who lack capacity3 where the court is of the view that the Director is best placed to exercise that power.
New decision-making arrangements
The Act introduces a number of new arrangements, to assist those who require or may shortly require additional support in making personal welfare and property related decisions, including pension decisions. As trustees and administrators are likely to encounter these arrangements in their dealings with beneficiaries, we would advise them to become familiar with the associated nuances. These arrangements can be summarised as follows:
- Decision-Making Assistant (a “DMA”): DMA is the first and least interventionist tier of support. A DMA may be appointed by a person who considers that his or her capacity is or may shortly be in question. A DMA is appointed to assist the appointer in making decisions in relation to the appointer’s personal welfare or property and affairs or both. However, where a person has appointed a DMA, the decision-making responsibility remains with the appointer.
- Co-Decision Maker (a “CDM”): a CDM may be appointed by a person who considers that his or her capacity is in question or may shortly be in question. In this case, the decision-making responsibility is shared jointly between the appointer and the CDM. The Director will maintain a register of all CDMs appointed.
- Decision-Making Representative (a “DMR”): a DMR is a court-appointed representative who is given authority to make relevant decisions on behalf of the relevant person. A DMR must, insofar as possible, ascertain the will and preferences of the relevant person on a matter the subject of, or to be the subject of, a relevant decision and assist the relevant person with communicating such will and preferences. The Director will maintain a register of all DMRs appointed.
- Decision-Making Orders (a “DMO”): the court can make a DMO (i.e. making a relevant decision on behalf of a relevant person) where it is urgent or otherwise expedient that a decision is made on behalf of an individual lacking capacity.
Reform of existing decision-making arrangements
Wards of Court
The Act phases out the existing Wards of Court system. As a result, a review of all existing Wards of Court will take place within three years by the court or upon application by the ward or appropriate person on their behalf in a process under Part 6 of the Act. The purpose of this review is to ascertain what continuing protection is appropriate for the former ward. The Act4 allows the court to make three distinct declarations:
(a) a declaration that the person does not lack capacity;
(b) a declaration that the ward lacks capacity unless a CDM is appointed to make one or more than one decision;
(c) a declaration that the ward lacks capacity, even if a CDM is appointed.
Powers of Attorney
Part 5 of the Act introduces a new form of Enduring Powers of Attorney (“EPA”) and allows a donor to appoint an attorney on whom the donor confers either or both of the following powers:
(a) general authority to act on the donor’s behalf in relation to all or a specified part of the donor’s property and affairs; or
(b) authority to do specified things on the donor’s behalf in relation to the donor’s personal welfare or property and affairs, or both
Existing EPAs created under the Power of Attorneys Act 1996 (the “1996 Act”) are unaffected, but a new EPA can no longer be granted under the 1996 Act. A key distinction is that EPAs under the 1996 Act are only registered when the donor loses capacity, but EPAs under the Act must be registered with the Director (who must establish and maintain a register of all EPAs made under the Act) promptly after they are made, but only become effective when a notification that the donor has lost capacity is accepted by the Director.
- New decision-making arrangements: Where instructions are received, on foot of these decision-making arrangements, we would advise trustees and administrators to verify the instructor’s authority by obtaining authenticated copies of the agreement or order and where appropriate reviewing the relevant register.
- Wards of Court: We suggest that trustees compile a list of beneficiaries who are currently wards and write to the committee or other person currently acting for these individuals noting that in light of the Act, a copy of the court’s declaration should be provided to the trustees as soon as it has been made. Depending on the outcome of the declaration, the trustees and administrators may proceed to take instructions from the beneficiary, a CDM or a DMR.
- Powers of Attorney: We suggest that trustees compile a list of all EPAs of which they have been made aware (made before 26 April 2023 under the 1996 Act and going forward under the Act), and that this list is reviewed annually to ensure that all EPAs received by the trustees are still valid and in force. We also suggest that where a new EPA is received, an authenticated copy is requested where not already provided.
The reform of the Irish supported decision-making system was long overdue and has been welcomed by human rights campaigners and healthcare professionals. The Act establishes mechanisms that ensure the will of those lacking capacity is respected. It is essential that trustees and pension scheme administrators become familiar with the Act, in order to understand how they can ensure their duties to beneficiaries are fulfilled in cases where a beneficiary’s capacity is in question.
- as amended by the Assisted Decision-Making (Capacity) (Amendment) Act 2022.
- Section 3 of the Act.
- Section 43(3) of the Act.
- Section 55 of the Act.
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.