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IPE special report May 2018

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Irish regulator supports multi-employer DC to drive consolidation

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  • The Dáil, Ireland's Parliament, in Dublin

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Ireland’s Pensions Authority has signalled it would like to see growth in the number of multi-employer funds as it pursues its “explicit” goal to decrease the number of defined contribution (DC) funds.

Pensions regulator Brendan Kennedy said the organisation was seeking to grow its enforcement powers in the area of DC governance but added that it was after “more nuanced” powers to help with its oversight of the market.

Kennedy – who, prior to the creation of the Authority, was chief executive of the Pensions Board – told an Irish Association of Pension Funds conference on governance that it was the organisation’s goal to raise the requirements for DC trustees, focusing on the areas of trustee knowledge, commitment and skill.

In his bluntest endorsement of consolidation in the DC sector, he also said it was the Authority’s explicit goal to “substantially reduce” the current number of funds.

“There are too many schemes to make it possible to achieve the trustee standards we believe are needed,” he told delegates.

“The current scheme numbers increase costs and make effective regulatory oversight and dialogue too difficult.

“Clearly, this objective means there has to be many fewer single-employer schemes.”

Kennedy has previously said the Authority was committed to the “principle” of reducing the number of schemes, and that it would be difficult to justify the continued existence of more than 100 DC funds in a country the size of Ireland.

He has previously ruled out the use of a licensing system for DC funds, as it would increase the amount of regulation.

The regulator further told delegates that he would seek additional powers to oversee governance of DC funds, although this would take the shape of increased dialogue with trustees.

He also said the organisation would want additional, “more nuanced regulatory powers that will underpin a more detailed oversight of DC schemes”.

The Authority will also be seeking to increase the standard of defined benefit trusteeship, and Kennedy said it was already in discussion with the Department of Social Protection over amending existing regulation.

The proposed changes to DC regulation are under consideration as the Irish government plans the launch of a supplementary pension system.

Minister for social protection Joan Burton has previously said the rollout of such a system would be “very gradual”, but pledged that details of the reform would be published next year.

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