Peter Fitzpatrick (Louth, Independent)
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The Government intends to pass legislation later this quarter to implement the institutions for occupational retirement provision, IORP II, directive. The Minister's counterpart in 2004, Séamus Brennan, provided for a derogation for a one-member scheme to apply when IORP I was being implemented that year. This was a practical solution in that the IORP I directive allowed one-member schemes, including self-administered pensions, to thrive and contribute significantly to Irish society from 2004 to the present.

The self-administered pensions sector is an indigenous Irish sector employing more than 320 people, and hundreds if not thousands more are employed indirectly through investments in Ireland. Self-administered pension holders, who are typically owners or employees of SMEs, invest a large proportion of their pensions, which are valued at approximately €4 billion in total assets, in Ireland. For example, they invest in Irish properties, SMEs, renewable energy and social housing.

As in 2004, the IORP II directive provides for the retention of a common sense and hugely beneficial derogation which would protect Irish jobs and investment in property, SMEs, renewable energy, social housing and much more. However, the Minister is choosing not to retain this derogation when the directive is transposed into law this year. She is choosing to put SMEs out of business, to terminate Irish jobs, to cut investment and financing of SMEs, to cut investment in renewable energy and, shamefully, to cut immediate investment in Irish social housing, when there is an unprecedented crisis in homelessness and social housing provision in this country. Why is the Minister choosing to do this at this time? It is beyond comprehension.

The UK specifically assessed this issue only recently. The UK Department for Work and Pensions produced an impact assessment on 25 September 2018, which determined that schemes with less than 15 members are to be excluded from the directive completely. This is common sense.

That is in accordance with the derogation that one of the Minister's predecessors, Seamus Brennan, sensibly implemented in 2004. What analysis did the Minister carry out to determine that this common-sense measure that is appropriate for UK citizens is not appropriate for Irish citizens?

In my constituency of Louth, Bespoke Trustees Limited and its sister company employ 32 people in Dundalk and is responsible for approximately 1,250 self-administered pension structures. Each of the 1,250 people concerned is affected by the directive. The self-administered pension clients are typically owners and employers of SMEs - the backbone of the economy. Many owners and employers want their hard-earned pension contributions to be reinvested in the economy. In conjunction with the local council and the approved housing bodies, respectively, Bespoke Trustees Limited has been responsible for numerous investment projects which have provided much-needed funding for both social housing units and housing units for the homeless in Louth and Dublin in the past three years. Since August, one project alone has been responsible for taking 30 families off the housing list and into newly acquired social housing properties. The project intends to house more than 100 families this year.

Regina Doherty (Meath East, Fine Gael)
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The overarching objective of the IORP II directive is to facilitate the development of occupational retirement savings in every EU country. Many of the provisions contained in the directive will support positive reform of the Irish occupational pension sector. The implementation of the directive will greatly enhance scheme governance and consumer protection for pensioners, members and future members.

The value of investments held in many small schemes fell substantially during the financial crisis. That highlighted the need for stricter supervision and regulation of schemes, especially for schemes investing in unregulated markets. The Government has agreed that the provisions of the IORP II directive should apply to all funded occupational pension schemes so that members of small schemes, including small self-administered pension schemes, get the same protections and oversight as members of large schemes, to safeguard their investments for the purposes of providing adequate income in retirement years. In that context, it is worth noting that the application of derogations in other EU countries is not common. It is unusual for the Deputy to compare us to the example set by the United Kingdom.

Article 19 of the IORP II directive sets out the investment rules for occupational pension schemes. The underlying principle in respect of capital investment is for schemes to invest in accordance with the "prudent person" rule and the other specific rules set out in the article. It is recognised that there should be an appropriate level of investment freedom for schemes within prudent limits and that is reflected in the rules. Assets must be predominantly invested on regulated markets, which means, at least 50%. That allows adequate scope for investment in instruments with a long-term economic profile and non-listed undertakings such as property and infrastructure.

There are approximately 100,000 single-member schemes in Ireland. The Pensions Authority advises that approximately 98% of those are already compliant with the new investment rules under the IORP II directive. According to the 2017 report of the Association of Pension Trustees of Ireland, APTI, there are 22,312 self-directed pension arrangements in Ireland. Only 7,756 of these are self-directed pension schemes. It is that small cohort that will now have to meet the standards that apply to all other occupational schemes in the country. Information from the Pensions Authority indicates that the vast majority of schemes are already compliant with the provisions of the new directive. It is important to note that the small percentage of existing schemes which are not compliant with the new rules will not be obliged to change their existing investments or borrowings.

Small self-administered pension schemes may continue to invest in the economy, including property and SMEs, but their investments must be properly diversified to avoid excessive reliance on any particular asset or group in order to minimise risk in the portfolio as a whole. Such diversification has been proven to reduce investment risk. The new directive does not ban self-directed investment. Rather, it does not facilitate further borrowing for investment and it limits future investment in unregulated sectors.

This is probably the most important part of what I will say. The application of the directive is prospective, not retrospective, which means that the changes will not affect existing investments and borrowings by schemes. The information given to the Deputy that a company will be affected and jobs will be affected is not accurate. The new directive will only impact prospectively. Single member schemes, including small self-administered pension schemes, will no longer be allowed to enter into new borrowing agreements, except for short term and liquidity purposes, and all future investments will have to be in accordance with the rules of the directive. Accordingly, no current investment plans will be impacted upon or jeopardised.

Officials in my Department, supported by the Pensions Authority, are managing the transposition process of the IORP II directive. The drafting of regulations is at an advanced stage to facilitate transposition into Irish law later this quarter.

Peter Fitzpatrick (Louth, Independent)
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If the directive is transposing the law as outlined, the much-needed projects to which I refer and many others will have to be terminated. I have seen the fantastic work they have done in Drogheda and Dundalk. That will take money away from providing immediate positive contributions to the housing crisis. I do not agree that what the Government is doing is in people's interests. If the directive is transposed as outlined, the approximately 30 jobs to which I refer will all be lost. I do not say that in order to scaremonger. The situation will probably be replicated throughout the country.

It is great to see companies investing in projects and in the wider economy. The Government must help people. This local business in Dundalk is responsible for 1,250 small self-administered schemes. The company has worked very hard. One of the Minister's predecessors, Seamus Brennan, identified the problem in 2004 and resolved it. It is unfair to state that we should not look at what happens in the UK. We replicate much of what happens in the UK. Much of the money that is being invested goes back into the economy. We have a serious shortage of housing and we have other serious problems. Currently, pension schemes invest the money in the economy. The last thing we want to see is multinational companies coming in, taking all this money and investing it outside of the country or the vulture funds coming in and not distributing money fairly. I urge the Minister to examine the position. She could make the required decision with the stroke of a pen. This is her directive. I would very much appreciate if the Minister addressed the issue.

Regina Doherty (Meath East, Fine Gael)
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With the height of respect, I do not believe the Deputy's information is not accurate. The application of the directive is prospective, so all of the 1,250 small self-administered pension schemes in Dundalk to which he refers are entirely safe. There is no risk of the loss of the 30 jobs to which the Deputy alluded because none of the current practices are changing. The directive only relates to future investments. When a new self-managed pension scheme is established the new directive will apply to it. The directive does not affect existing investments, governance aspects, property projects, etc. The directive will only affect newly established small self-administered schemes from the day the directive is applied, which will be later this quarter.

We already have schemes that are managed by multinational investment companies and I do not see why a small self-administered fund should be governed any differently to a multinational one. We have pension rules and they should be as easily applicable to the smallest of schemes as to the largest. There should be equality of governance. That is all the IORP II directive seems to do, namely, to set out a single regulatory authority across the European Union for all managed pension funds. There should not be a difference. There will not be a derogation in Ireland.