Ireland’s Pensions Authority has announced an engagement programme with the country’s pension schemes to assess how they are meeting their governance and risk obligations.

Focusing initially on large multi-employer schemes – both defined benefit (DB) and defined contribution (DC) – the supervisor’s programme will include:

  • Completion of a questionnaire;
  • Meeting(s) between trustees and the regulator, based on the completed questionnaire;
  • A findings report including the regulator’s observations and, where appropriate, recommendations for improvement.

The questionnaire will help the regulator assess a scheme’s governance standards and how these may affect good member outcomes.

It will also, where appropriate, enable the assessment of how well a scheme meets the proposed requirements for master trusts published in June 2019, and other requirements of the IORP II directive, once this has been transposed into law.

Grace Guy, the regulator’s head of supervision and enforcement, said: “The Pensions Authority is committed to improving member outcomes by implementing a forward looking and risk-based approach to supervision. This will involve more direct engagement with trustees involving dialogue and scrutiny about how well they are exercising their responsibilities to their members.”

The programme will later be extended to all schemes.

The Pensions Authority has previously held direct engagement meetings with trustees of schemes and said any feedback has been restricted to the pension scheme itself, although issues of general concern to the sector as a whole have given rise to alerts circulated by the regulator.

Roma Burke, partner at LCP Ireland, said: “If feedback is amalgamated and shared in the engagement programme, it should help all pension scheme trustees to better understand what is expected of them.”

Burke said that as the regulator is targeting larger schemes with this exercise, there is a good chance that these schemes have more resources to better address governance and risk management.

“The Pensions Authority is committed to improving member outcomes by implementing a forward looking and risk-based approach to supervision”

Grace Guy, head of supervision and enforcement, The Pensions Authority

According to the OECD working paper on pension fund governance, good governance can spare pension schemes the costs of over-regulation, Burke said.

She said: “I hope the supervisory approach adopted by the authority will be dictated by its assessment of a pension scheme’s risk profile – schemes judged to pose less risk could be subject to a lighter supervisory approach.”

However, according to Burke: “The challenge for the regulator is also to implement a proportionate approach for smaller schemes who may simply not have the same resources available.”

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