The Irish Pensions Authority is concerned that some pension schemes do not seem to have a sense of urgency in meeting the IORP II implementation deadline of 1 January 2023, Pensions Authority chief executive and Pensions Regulator, Brendan Kennedy, has said.

Speaking at the Irish Association of Pension Funds Investment Conference, Kennedy noted that the authority was very conscious that a lot of work was going on to meet the deadline.

However, he stated the authority was also concerned about the lack of urgency among some pension schemes.

Kennedy pointed to the new Own Risk Assessments (ORA) as one of the most significant innovations of IORP II, stating that the most important aspect was they must be objective.

“The approach must be to assess all the risks facing the scheme and deciding how best to address those risks,” he said.

“What the ORA must not be is a rationalisation of the decisions previously made.”

Defined contribution (DC) schemes should consider investment risk just as thoroughly as defined benefit (DB) schemes, Kenndy continued, noting that the ORA process should look at risks to DC member outcomes and at all investment options.

“The quality and integrity of the ORA are unambiguously the responsibility of the scheme trustees,” he stated. “But obviously the risk key function holder (KFH) will play a vital role in the process.

“In particular, the risk KFH will use their knowledge and experience to support the trustees in ensuring that the ORA process is thorough and objective.

"However, it is important to be clear that trustees’ obligations in relation to risk are not limited to completing a periodic ORA.

“Trustees must put in place a risk management system, which has an ongoing function within the management and governance of the scheme. Similarly, the role of the risk KFH is an ongoing responsibility, and is not limited to the task of supporting the ORA.”

The Irish Pensions Authority will be holding a risk conference in the first half of 2023 due to the “importance of risk” for pension schemes.

Kennedy also touched on liability-driven investment (LDI) following the issues that had arisen in the UK pensions sector.

He said that there were several reasons why such a situation was less likely to occur in Ireland and, if it did, why it would have less impact.

However, Kennedy stressed that the authority was not complacent on this issue.

“Proportionately speaking, LDI is much less common in Ireland than in the UK,” he stated. “Nonetheless, there is a significant amount.

“In coming weeks, we will be making contact with the trustees of the largest DB schemes in order to get more granular information about the extent of LDI and to deepen our understanding of LDI structures and practices in Ireland, conscious that there may be significant differences between schemes.”

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