Ireland's Pensions Regulator, Brendan Kennedy, reflects on the consolidation trend in the Irish pensions market, and the work still needed to ensure the best outcomes for savers


Irish occupational pensions have been undergoing significant change since 2021. It is now becoming possible to see what future Irish pensions will look like and for the Irish pensions regulator to implement its priorities.

An unusual feature of Irish pensions has been the large number of pension schemes – at the beginning of 2023 there were approximately 160,000 defined contribution (DC) schemes and about 500 defined benefit (DB) schemes. These are large numbers by any standards, but particularly for a country with a working population of about 2.7 million. Almost all of these schemes are single-employer schemes and
about 150,000 of these schemes have a single member.

In 2021, Irish pensions legislation was amended to implement the EU IORP II Directive. The effect of this was to impose higher standards of governance and compliance on Irish schemes, to require the appointment of key function holders in each scheme and to set minimum standards of qualification and experience for the boards of trustees. When transposing the directive, the Irish government decided against any derogations for smaller pension schemes: The smallest schemes would be obliged to meet the same standards of governance and compliance as other schemes, though it did give single-member schemes, established before April 2021, an additional five years before having to comply with the new requirements.

In response, the great majority of schemes and their sponsoring employers have decided that it is impractical and/or uneconomic to meet the obligations of the revised legislation. In most cases, existing assets and future contributions are being transferred into master trusts, others are being transferred into personal retirement savings accounts (PRSAs) – a contract-based retirement savings vehicle.

The result has been a considerable amount of consolidation-related activity in the Irish pensions sector in the last two years. There are now 17 DC master trusts operating, and aggregate inflows to these have been averaging over €1 billion per month. For multi-member schemes and newer single-member schemes, this consolidation process is expected to be substantially completed in the coming months. Single member schemes, established before April 2021, have until April 2026 to become compliant with the new requirements. However, even for these schemes, tens of thousands have been wound up and transferred. It is too early to say what the final number of Irish pension schemes will be, but it is clear that by 2026 there will have been very substantial consolidation, which will provide the opportunity for much increased efficiency in the administration and management of pension schemes.

The Pensions Authority is the body responsible for the supervision of Irish pensions. A much smaller number of pensions schemes provides the authority with the opportunity to increase its engagement with each pension scheme, and to implement a supervisory process based on dialogue with the trustees.

The best outcomes for the members and beneficiaries of pension schemes depend on the culture and attitude of the boards of trustees. The Pensions Authority is very aware of the importance of these factors, and monitoring of board culture will be central to its work.

Given the complexity and dynamism of the environment in which trustees look after their members’ retirement savings, trustees cannot expect to operate on the basis of a detailed to do list provided by the regulator. Trustees need to take responsibility for the management of their scheme, and to ensure they are informed and active. Engagement between trustees and the authority can serve as a useful check for both in working towards the common objective of good member outcomes. The change in Irish pensions is not yet complete, but the features of the new landscape are becoming clearer. However, there is still a lot to be done.

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