Pension reform and consolidation of defined contribution (DC) pension structures is high on the agenda of the Pensions Authority in the lead up to implementation of Institutions for Occupational Retirement Provision II Directive (IORPS II) and introduction of a Universal Pensions Scheme. The current deadline is Q4 of 2018 for rationalisation of pension products and Q1 of 2019 for IORPS II.
The Pensions Authority’s draft report on “Governance and Simplification of Supplementary Pensions” to the minister for social protection in January 2017 cites a clear objective “to improve as far as possible the outcome for pension savers”. The Pensions Authority has not yet elaborated on their definition of an “improved outcome for pension savers”, but one of the key published proposals is “the number of schemes in Ireland should be reduced from the current approximate figure of 160,000 to a medium-term target of 100 – 150 active schemes, to facilitate effective oversight”.
At present, the vast majority of the 160,00 current schemes (active and frozen) are single-member executive schemes with access to advice regarding options, features, products and related taxation treatments available from a wide panel of qualified financial advisers. If the Pensions Authority proposals go ahead and the number of schemes is somehow reduced to 150, then the question arises: Who is going to provide the advice to all the scheme members and employers?
Even before this stage is reached, other questions should be answered, including:
- Who will provide the advice as to which schemes should seek to retain scheme status?
- Which scheme members should switch to contract/PRSA status?
- Who should switch to Personal Retirement Bonds [PRB] (while still an option)?
The Pensions Authority proposals are heavy on governance issues for any Trustees who choose to remain in place following the proposed scheme rationalisation process, but light on the matter of providing access to advice for the huge number of pension savers likely to be affected by the proposals.
Over the next 18 months, pension advisers will need to update clients on the likely impact of the current proposals, and also carry out a review of current pension structures and arrangements.