The pension environment in Ireland is in a period of radical change. This era of evolution began with the launch of the National Pensions Policy Initiative (NPPI), by the Pensions Board (Irish national occupational pensions regulator), in 1996. Since then, we have had a series of developments that collectively will change the face of retirement provision in the country.
The government has brought forward two significant pieces of legislation, the National Pensions Reserve Fund Act 2000 and the Pensions (Amendment) Bill 2001, that herald a significant change in pensions in Ireland. The Irish Association of Pension Funds (IAPF) will play its part fully in the development of the new emerging pensions environment in a creative and imaginative way.

National Pensions Policy Initiative
We are very pleased that the government’s ongoing reaction to the Pensions Board report, the culmination of NPPI consultation process, ‘Securing Retirement Income’, has been positive. This report, published in May 1998, set out key recommendations for the development and growth of pensions in Ireland. The Pensions (Amendment) Bill 2001 was published last July and, the following are some of its key aspects:
q Personal retirement savings accounts. The bill provides for the introduction of a framework for personal retirement savings accounts (PRSAs), which will be low-cost, easily accessed and long term to allow people to save for retirement in a flexible manner.
q Pensions ombudsman. The bill also proposes the introduction of a statutory pensions ombudsman, financed by the state, to provide a right of redress in relation to occupational pensions and PRSAs.
q The role of the pensions board. The role of the pensions board is being extended to include regulation of PRSAs and the composition of the board will include a representative of consumer interests appointed by the minister or such organisation or organisations as the minister considers representative of consumer interests.
The board will be responsible for licensing and approving PRSA providers and their ongoing supervision, approving PRSA products including reviews of charges and promotional material and recording and maintaining a database of statistics in relation to PRSA providers and their business.
q Changes to occupational pension scheme provisions. The bill also addresses other aspects of pension scheme provision in Ireland. These include: vesting rights; preservation and revaluation; new options on transfers; minimum benefits for members; minimum funding standard (MFS); pension increases; remittance of contributions; treatment of surpluses; disclosure, and trustee liability for investment.
The bill is not complete and the minister intends to introduce additional provisions during the parliamentary debates, including the introduction of a limited pension compensation fund. The bill also provides for much of the detailed implementation to be introduced by regulation, yet to be drafted. (The full text of the Bill and the explanatory memorandum are available at the IAPF web-site: www.iapf.ie).

The National Pensions Reserve Fund
The Irish finance minister, Charlie Mc Creevy, announced the creation of a National Pensions Reserve Fund that will help stabilise future state pension costs. The association has maintained a strong interest in developments surrounding this fund and has been a supporter of the idea since the Pensions Board in its report, ‘Securing Retirement Income’ (May 1998), first recommended it.
The legislation to give effect to the reserve fund was signed into law in December 2000 and the commissioners to oversee the fund have now been appointed.
As part of our ongoing interest we commissioned Shane Whelan, of Shane Whelan & Co, who is a noted investment strategist in Ireland, to report on the issues surrounding investment strategies that the fund will face. The report, ‘Remarks on the Investment Strategy of the National Pensions Reserve Fund’, tackles many of the difficult issues that the commissioners will face and, we hope that it will generate a timely and informed debate on this important matter (The full report is available on the IAPF website: www.iapf.ie).

Demographics and the changing nature of work patterns
Ireland, as many European countries, has a changing demographic profile. The dependency ratio is expected to rise in Ireland, although given the current age profile this will fall at a far slower rate than elsewhere in Europe. We have time to plan for the increased dependency and it is for this reason alone that the Irish government has decided to begin building a separate fund to cater for future state pension liabilities.
Work patterns too have been changing with a shift to career as opposed to job based work arrangements. This has produced an increase in contract, part-time and atypical workers. The challenge for retirement provision in Ireland is to create more flexible and simple pension vehicles that will facilitate this shift in work patterns and, the recently published Pensions (Amendment) Bill will seek to address these issues.
We believe that the recent developments in Ireland will help to develop the concept of saving for retirement in Ireland and, the Irish Association of Pension Funds will continue to work with this objective in mind.

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