Ireland’s Pensions Authority will call for a review of its regulatory powers and the consolidation of the pensions sector when it proposes a reform package to the government later this year.
Brendan Kennedy, head of the pension regulator, said the reform package to be submitted to the Department of Social Protection (DSP) would be independent of its work for the Universal Retirement Savings Group (URSG).
The government recently tasked the URSG with boosting pension savings rates, potentially through the introduction of auto-enrolment.
Speaking with IPE, Kennedy said the reform package – set to be put out to consultation by the middle of 2016, with a final draft submitted by the end of the year – would draw on a number of the ideas contained within the revised IORP Directive.
Kennedy, acknowledging that the “shape” of the regulator’s thinking was unlikely to come as a surprise to the industry, highlighted the need to reduce the number of pension funds and increase the focus on governance.
“There is likely to be a lot more detail,” he said, “but I suppose those are the two of the most significant issues.”
The Authority recently consulted on the need for improved trustee qualifications and last week published the first of three defined contribution (DC) codes of conduct covering broad trustee responsibilities and trustee conflicts of interest.
Although Kennedy conceded that the sector’s consolidation was a matter for the government, he repeatedly highlighted the issue, saying it was “central” to the regulator’s future plans.
“There are a variety of routes to consolidation, and, given the large number of current schemes, any consolidation is going to be quite tricky because you need a lot of activity by a lot of schemes.”
Consolidation could be interpreted in the sense of reducing the current number of DC funds – the most likely vehicle to improve coverage under the system being planned by the URSG – but also reducing the number of DC fund types.
Kennedy has previously spoken of a role for multi-employer DC funds in reducing the number of schemes, and said it would be difficult to justify more than 100 DC funds in a country the size of Ireland.
The regulator currently oversees an estimated 200,000 trustees, responsible for an estimated 160,000 pension funds.
Speaking last week during the launch of the DC codes of conduct, Mary Hutch, the Authority’s head of policy, also noted the more than 130 types of Personal Retirement Savings Accounts currently in use, with a reduction in the number of vehicles desired by the regulator and Ireland’s tax authority.
Hutch added: “A simplified system would also be easier to understand for employers, employees, members and prospective members and greatly reduce – and possibly remove entirely – opportunities for regulatory arbitrage.”
Kennedy said he was hopeful the Authority’s submission would be able to draw on a nearly finalised IORP II draft by the end of the year.
“It would certainly be good to have answers,” he said.
The European Parliament last month finalised its negotiating draft for the Directive, and the European Commission, legislators and the Council of the EU will now agree a final draft during its trialogue negotiations.