IORP II Transposed in Ireland - Significant changes lie ahead for pension schemes

Regulations have been published this week by Minister for Social Protection, Heather Humphreys, to transpose the EU IORP II Directive into Irish legislation. These regulations introduce higher standards for pension scheme governance.

The regulations will apply to all company pension schemes, but there are different timelines depending on the type of scheme.

One-member arrangements have a derogation that defers most aspects of the regulations for 5 years
While the regulations will apply more immediately to group schemes, the Pensions Authority have consistently recognised that schemes must be given sufficient time so that they can become compliant in an orderly manner.

Irish Life has been actively engaging with the Pensions Authority, Revenue and Government departments, and we will continue this positive engagement to ensure that the future pension landscape gives the best outcomes for members, employers and trustees.

Significant changes lie ahead

Irish Life has been carefully preparing and planning for change in anticipation of the legislation being enacted. We are glad to say that the details announced this week are similar to the forecast changes we have prepared for. The exact path for schemes now will be a case by case assessment. No one solution will fit for all.

For some schemes, the additional compliance and regulatory standards may be too onerous and they may look to other solutions, such as the EMPOWER Master Trust.
Other (likely larger) schemes will adapt the new approach and continue as they are but adhering to the new, higher standards of governance.

We believe there needs to be a firm focus on end member experience and communication during this time and look forward to working with all clients and advisors in this regard.

We believe that the 5 year derogation for one-member arrangements is appropriate. This will allow for the introduction of the IORP II regulations in a way that is coordinated with the other elements of the Government’s Roadmap for Pensions, including pension simplification.

We expect to see further changes in the next couple of years, such as proposals for a significant review of PRSAs that could see employer contributions to a PRSA being equalised with the current employer contribution rules for company pensions.