Transition to forward-looking risk-based supervision of IORPs in Ireland 

The Commission aimed at supporting the Irish pensions supervisory authority in implementing a robust supervisory framework for IORPs and in identifying key actions and drivers to promote cultural change in the market, with a view to contribute to its consolidation. 

Context

The recent transposition (on 22 April 2021) of the IORP II Directive into Irish law by the European Union (Occupational Pension Schemes) Regulations 2021 (S.I. No. 128 of 2021) has represented a significant change for Irish occupational pension schemes and for the authority in charge for supervising the sector  
supervisory process was broadly rules based and retrospective in nature, in accordance with its previous mandate: the revised legislation introduced by the IORP II Directive now requires the authority to carry out prudential supervision of schemes based on a forward-looking risk-based approach. In addition, a significant change brought about by the overhauled regulatory framework is the end of the exemption given to IORPs with less than 100 members: as a result, a significant number of them will face challenges in complying with the provisions of the IORP II Directive from the outset and ongoing, in particular because they will incur significant costs relative to their nature, size and scale. The large number of small IORPs in the Irish market and lack of consolidation among them might ultimately result in sub-optimal outcomes for DC pension scheme members: these could face higher charges and poor management, with limited economies of scale not enabling a reduction of costs and the achievement of higher governance and risk management standards. 

Support delivered

The European Commission partnered with the European Insurance and Occupational Pensions Authority (EIOPA) to support Ireland in addressing the challenges described above, in particular via a technical support project which lasted around 16 months. The support included an analysis of the current Irish occupational pensions market and of the related regulatory and supervisory framework currently established in Ireland, a study of the market features and drivers, and recommendations aimed at enhancing current supervisory practices and prudential requirements with a focus on master trusts, improving reliability and quality of data and defining adequate business intelligence/data management solutions, and a strategic roadmap to drive market consolidation on the basis of expected cultural changes in the market. 

Results achieved

The project contributed to enhance the beneficiary authority's capacity to effectively and efficiently implement and deploy a risk-based, forward-looking supervisory approach, and to drive market consolidation via the promotion of a culture of compliance and risk management in the Irish IORPs market. Over the longer-term, these results shall contribute to increase stakeholders' awareness about IORP II regulatory requirements, promote the long-term consolidation of the pension schemes market in Ireland achieving increased efficiency to the benefit of employers and employees, and build up trust in the Irish pension system, strengthening the overall reform effort pursued by Ireland in the pensions policy area. 

More about the project

You can read the documents related to the project here: