Regina Doherty (Meath East, Fine Gael) | Oireachtas source

The transposition of the IORP II directive will result in significant improvements in the regulation and governance of funded occupational pension schemes in Ireland. While the directive provides for the possibility of a derogation from specific articles for smaller schemes, members of smaller schemes should have the same protections and oversight as members of larger ones. Money saved for pension purposes should be properly protected to ensure people have adequate income for their retirement years. The value of investments held in many schemes fell substantially during the financial crisis. This highlighted the need for stricter regulations and greater protections, especially for small schemes investing in riskier unregulated markets.

It has been suggested single person pension schemes should be exempt from the application of IORP II rules on the basis that the scheme members are competent in the management of their own affairs and that the governance requirements are unduly onerous. However, Ireland has a far larger number of small schemes than any other EU state and the Government shares the European Union's concerns about such small schemes, particularly in the protection of consumers and the money they have invested, the riskiness of these investments, the charges that apply and the standard of governance. Accordingly, the Government has decided that the provisions of the directive should apply to all funded occupational pension schemes.

The application of the directive is prospective, not retrospective. This means that existing investments and borrowings can remain in place. After the transposition, no single member scheme, including small self-administered ones, which are the only schemes currently allowed to borrow, will be allowed to enter into new borrowing arrangements, except for short-term and liquidity purposes. All of their future investments will have to be made in accordance with the investment rules included in the directive.

Officials in my Department, supported by the Pensions Authority, are managing the transposition process of the IORP II directive. TIt is a substantial directive and the preparation of regulations to transpose it is at an advanced stage. It is expected that transposition into Irish law will be achieved before the end of March.

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