Ireland’s Pensions Regulator, Brendan Kennedy, has said around 35,000 pension schemes have wound up since the start of 2023.

Providing an update at the Irish Association of Pension Funds (IAPF) Investment Conference 2024 in Dublin yesterday, 13 March, Kennedy said: “We have seen a lot of consolidation of pension schemes in that time and there’s a lot more going to happen, particularly in 2024.”

According to Kennedy, between April 2021, when the IORP II Directive was transposed, and the beginning of 2023, there was very little movement in terms of consolidation. Around 120,000 single member schemes existed pre-April 2021. A further 18,000 single member schemes have been set up since April 2021 and around 17,000 multi-member schemes (DC) also existed.

“In total that’s about 160,000 schemes; that was the position at the beginning of 2023. To date we have seen that the vast majority of the post-21 single member schemes have consolidated, either into personal retirement savings accounts (PRSAs) or master trusts,” Kennedy said.

“That process is nearly over and by the middle of this year we expect that nearly almost all of those pension schemes will be gone. If we look at the group schemes, to date about 4,000 of them have wound up, have consolidated, almost exclusively into master trusts and we expect to see considerably more consolidation in the coming months.

“We then have the derogated, older single member schemes, this is big challenge for the pension sector. There has been a great deal of activity there in so far as we have seen about 13,000 or 14,000 of those consolidated. In total, the reduction in the number of pension schemes over the last year and a bit has been in the mid-30,000s, around 35,000.”

He added that this is an “enormous achievement” but there “is a lot more to do” particularly with the older derogated schemes.

Going forward, Kennedy said most pensions will be DC and much of this will be in master trusts, but the number of PRSAs are also growing. He expects to see few, if any, new single employer schemes being set up in the future.

In regard to DB, the regulator said this sector is being run off, with a very low proportion of schemes open to new members.

“There are about 480 of such schemes left and actually many are only open to future accrual and not to new membership. We have heard discussion of buyout of the pensioner liabilities for these schemes. We haven’t seen a great deal of activity yet but it is clearly a live issue. If we look across the Irish Sea we can certainly see what goes on in the UK and we would expect to see more of that happening. Particularly given the surplus position of most DB schemes has significantly improved over the last few years and so buyout has become a practical option for lots of schemes.

“Our attitude from the Pensions Authority is that we think trustees should be considering buyout very, very seriously because it has the potential to remove risk from scheme members and that obviously has to be a good thing.”

On the recent IORP II reforms, Kennedy said he is beginning to see the “contours of the post-IORP II landscape”. On compliance with the new regulations, trustees have got to “first base” and the Pensions Authority will begin to engage more deeply with schemes on this going forward.

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