The Irish Pensions Authority has launched a consultation on consolidation of defined benefit (DB) pension schemes, looking at whether a DB master trust market could function well, and how it could best be regulated.

The master trust market in Ireland has continued to grow as trustees and employers respond to obligations under IORP II.

However, the Pensions Authority pointed out that, currently, these master trusts are limited to defined contribution (DC) arrangements, as the nature of DC benefits lends to the pooling of assets of multiple employer schemes, governed by a single trustee board, in a manner that allows for efficiencies and economies of scale.

In contrast, the Pensions Authority argued that the nature of DB benefits, schemes and regulation is more complex, emphasising the need to identify and examine DB-specific risks that could arise in a DB master trust market, should one be facilitated.

In particular, the authority is seeking views on a potential model for DB consolidation, the potential impact of introducing DB consolidation, how DB consolidation would operate, and how DB consolidation should be regulated.

Key questions included in the consultation include what impact the introduction of DB consolidation will likely have on the wider DB market, what schemes are most likely or unlikely to benefit, and what, if any, regulatory measures could be needed to help protect members.

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