The Pensions Authority in Ireland has said that “the number of Irish pension schemes has begun to fall, for the first time” as a result of the implementation of the IORP II Directive.
In a statement Brendan Kennedy, the Authority’s chief executive officer, said that the directive’s implementation “involves fundamental and unprecedented change to Irish pensions”.
“Considerable progress has been made, which is the result of a lot of work by pension scheme trustees, sponsoring employers, administrators and other professionals, and, not least, by the staff of the Pensions Authority. Some schemes have decided to take the necessary measures to become compliant with the new obligations,” he said.
However, Kennedy noted, for many schemes, trustees and sponsoring employers have decided that “it is not practical or economic to make their scheme compliant and they have decided to move their pension provision into multi-employer master trusts or Personal Retirement Savings Accounts (PRSAs).
The number of new pension schemes being created has fallen from a typical average of over 1,000 schemes per month almost to zero and existing schemes are closing in increasing numbers as their benefits and contributions are moved elsewhere, the regulator stated.
The Pensions Authority is engaging closely with the pensions sector to support this activity and to address the inevitable practical issues that arise, Kennedy said, adding that the Authority welcomed the “positive and practical attitude adopted by almost all involved’.
However, he said, it is now more than two years since the transposition of the Directive into Irish legislation. He expects the remaining group schemes to achieve compliance before the end of 2023 and tyhe regulator’s focus “must inevitably turn to considering enforcement action” against the trustees of non-compliant schemes.
In April 2021, a large number of single member schemes were provided with a five-year derogation from most of the IORP II obligations. This derogation period is now almost halfway through. Trustees of those schemes and their advisors and administrators should be already considering how they can become compliant – April 2026 is the date by which this process should be completed.
As a result of the transposition, the Pensions Authority is now required to apply a system of forward looking risk based supervision to pension schemes. As part of this, the supervisory review process will be implemented in the coming months and years as the IORP II transition is completed, Kennedy said.
“We have already implemented a system of close supervision of master trusts,” he added.