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Impact Investing

IPE special report May 2018

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Ireland says UK funds out to escape PFF levy

Some large UK pension schemes and UK funds of multinational companies are considering relocating their schemes to Ireland to avoid Pension Protection Fund obligations, the Irish regulator says.
“A number of UK schemes are looking at this as it frees them from paying a levy to the PPF,” said Jerry Moriarty, head of compliance and investigations at the Irish Pensions Board.
Speaking at a recent conference in London on pan-European pension models, Moriarty added that relocation was being driven largely by regulation and cost saving.
However, he warned that UK schemes should also take into account various Irish regulations and barriers, such as higher funding requirements, before shifting across.
He told IPE that he doubts whether the move by UK schemes will take place, but some funds are currently weighing up the pros and cons.
The PPF told IPE that it was a commercial decision for the company whether to offshore its pension scheme. If schemes move outside the UK, they are no longer part of the PPF’s remit, said a spokesperson.
Furthermore, if the scheme is risky, relocation also reduces risk in the UK system.
Ireland’s regulatory structure and environment, availability of skills, investment freedom and tax regime, make it an attractive centre for Pension Fund Pooling Vehicles, said Moriarty. The government support also assists with the removal of barriers. “This is in the future but it has not happened yet,” said Moriarty.
Also speaking at the conference, Luxembourg Banker’s Association executive committee member Fernand Grulms said he didn’t expect to see defined benefit schemes in pan-European pension funds because of the fully funded requirement. “It’s a big restriction,” he said.
Both Moriarty and Grulms said it would take time before pan-European pension funds are fully established. “It will happen but it’s a question of how long it will take,” said Moriarty.

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