Ireland’s Pensions Authority is “disappointed by the inadequate preparation” of many pension schemes for the forthcoming IORP II Directive.

It follows a survey by the authority on trustees’ preparedness for the directive, which is still awaiting transposition by the Irish government, despite an initial deadline of January 2019.

The IORP II preparation survey 2020 was voluntary with 100 defined benefit (DB) and 100 defined contribution (DC) trustees sent the survey. However, just 35 DC schemes and 67 DB schemes responded. The authority said it was surprised by the low response rate, especially for DC schemes, which may paint a more optimistic picture than actually exists.

“Overall survey findings indicated there is a general level of awareness of the directive among trustees but there is a reluctance to make changes to meet requirements until after the directive is transposed into law,” the authority said.

“There is widespread belief amongst those who responded that new legislation will increase cost, time and resources and proportionality of legislation is a concern for schemes of all sizes. The survey findings also highlighted that further guidance from the Pensions Authority is awaited by trustees on many areas covered by the directive.”

The responses were mixed when it came to awareness of the pending responsibilities; 40 per cent of DC and 31 per cent of DB schemes said they were ‘somewhat aware’ of the pending responsibilities. Fifty-seven per cent of DC and 69 per cent of DB schemes responded that they were ‘fully aware’ of the pending responsibilities. Just 3 per cent of DC schemes said they were ‘not aware’ of the pending responsibilities.

It found that a larger proportion of DC schemes (43 per cent), compared to DB schemes (27 per cent) had not discussed the potential effects of the directive on the scheme with the sponsoring employer. On other hand, 57 per cent of DC and 73 per cent of DB schemes responded yes, that they had discussed the potential effects of the directive on the scheme with the sponsoring employer.

In regards to what the most likely scenario for future retirement provision for members of the scheme is, 31 per cent of schemes said the employer would maintain and support the scheme. Six per cent of schemes responded that the employer would wind-up and transfer to a multi-employer/master trust scheme. A further 6 per cent of schemes did not answer the question.

The authority plans to conduct further information gathering surveys during 2021.

Share Story: