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IPE special report May 2018

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Irish scheme worries are fuelling manager reviews

Irish pension fund concerns over uncertainty in domestic and European legislation and regulation are being expressed through increasing manager reviews, according to a survey by the UK based Pension Fund Partnership and market research consultant MRM Projects.

The survey, conducted among 75 Irish schemes with total assets of approximately IR£4bn, reveals that two-thirds of respondents have reviewed their manager in the past year or plan to do so in the next year.
The reviews follow a proliferation of investment performance and strategy discussions, which the report says have been “dominating” trustee meetings at Irish funds over the last 12 months.

And Irish pension funds say that the worry over regulatory uncertainty is being compounded by the potential cost of providing pensions for a part-time and transient workforce, as well as European developments including the impact of the euro.

Indeed, Irish trustees are becoming so aware of their responsibilities in the face of such challenges that three quarters have been sent on specialist training courses, while one third employ the services of a specialist law firm.
Worryingly, only four per cent of respondents claim to be very knowledgeable about the rules governing schemes in Ireland and just five per cent make the same claim about the role of The Pensions Board in Ireland.

The report also shows that although some schemes have a third of their assets in Ireland, many have much smaller percentages of their portfolio invested domestically with the remainder spread evenly between Europe and the rest of the world.
Cost factors for defined contribution (DC) plans in Ireland – the chosen route for almost all new Irish funds - are also revealed to be significantly lower for employers, with companies contributing on average around six per cent of their employees annual salary towards pension, compared to over nine per cent for their defined benefit (DB) counterparts.
Furthermore, two-thirds of non-contributory schemes have a company contribution level in excess of 10%.

Consequently, 18% of respondents from DB plans say it is likely that a switch will be made to a different kind of scheme in the next year.




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