The Irish Pensions Authority will “triple” its supervisory reviews in 2025, Ireland’s Pensions Regulator, Brendan Kennedy, has said, warning trustees that compliance issues must be addressed urgently.

Speaking at the Irish Association of Pension Funds’ (IAPF) Spring Conference recently, Kennedy detailed key findings from the 2024 supervisory review process (SRP) and outlined priorities for the coming year.

Kennedy stated that while some pension schemes demonstrated good governance, others still have "work to do."

The SRP initially reviewed six master trusts, one large defined contribution (DC) scheme, and one large defined benefit (DB) scheme, assessing governance, risk management, and operational effectiveness.

“I will give an overview of the main issues, but further detail on the specific risks and issues identified will be set out in the authority’s annual supervision report, which will be published on the authority’s website in the coming weeks,” he said.

He said that some master trusts are already addressing their legacy issues by rationalising legacy fund choices and reviewing legacy charging structures to ensure maximum efficiency and achieve the benefits of scale.

He also highlighted that some schemes have secured fee reductions for members as assets under management have grown, while others have engaged independent advisers to enhance governance and oversight of service providers.

However, Kennedy identified critical areas that need improvement, including governance structures, risk management frameworks, and member outcomes.

“We have seen some trustees who have approached policies in a ‘box-tick’ manner, a compliance burden to be contended with, rather than a practical tool that supports them in knowing and meeting their responsibilities,” he said.

The authority also found shortcomings in managing conflicts of interest and oversight of outsourcing, particularly in the appointment and accountability of service providers.

“Trustees must hold all service providers to account to ensure they deliver on commitments, irrespective of who that provider is or how they were appointed,” he emphasised.

The review also assessed trustees’ ability to manage scheme risks, focusing on the own-risk assessment. Kennedy noted inconsistencies in risk identification and assessment, with some schemes failing to consider key risks such as sustainability and outsourcing.

However, he acknowledged that many trustees are working to improve risk management frameworks.

“Establishing a risk culture is about more than processes, and there is a need in some cases for mindset and behavioural change that may prove to be more challenging for trustees. This is not something that we can wait for years to occur,” he said.

The final area of improvement for schemes that Kennedy spoke about was member outcome considerations, in which he stressed that trustees must hold service providers accountable, ensure investment choices align with members' risk profiles and appetite, and enhance communication beyond statutory requirements.

“There is a trend towards automation and the use of technology to engage with members. This trend is welcome, but it is important that trustees regularly assess how effective these tools are and test the level of engagement with the technology and with all communications amongst members, adapting the approach, when necessary,” he noted.

Kennedy also noted the importance of cost transparency in DC schemes and master trusts, adding that the authority will “closely monitor” initiatives such as the Cost Transparency Standard in 2025.

Furthermore, Kennedy outlined key focus areas for the authority for 2025. In addition to the authority’s supervisory review program expanding significantly, he said it had published further details on its website about Digital Operational Resilience Act (DORA) compliance.

Kennedy confirmed that a review of the Code of Practice will take place later this year, nearly five years after its introduction. However, no significant changes in direction are expected. Instead, the Authority will focus on establishing value for money benchmarks and refining investment objectives.

The authority is also preparing to launch a new IT system in 2026 to enhance data collection and supervision.

“Our objective is to make sure that our systems are robust, and that they support forward-looking risk-based supervision, and evidence-based data-driven policy,” he said.

However, he warned that data quality in submissions remains an issue.

“We spend far too much time addressing data issues and manually correcting what is sent to us. Our new platform will have additional layers of validation to aid with accuracy but equally, we will be looking at new approaches to stricter enforcement on submissions in future,” he said.

He also explained that the authority is supporting the Department of Social Protection, which is preparing legislation for scheme authorisation and master trusts.

Additionally, efforts are underway to develop in-scheme drawdown options and explore DB scheme consolidation.

He reminded trustees that the derogation for older one-member pension schemes will expire in just over a year, requiring compliance with IORP II by 2026. In the shorter term, he stated that the authority would intensify efforts to address non-compliance in other schemes.

“I hope I have succeeded in communicating to you a sense of urgency: there is a lot to do by all of us, and it needs to be done sooner rather than later,” he continued.

“We have made a lot of progress in the last few years, but we are not there yet.”

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