Single Member Schemes After IORP II

The transposition of IORP II Directive into Irish law has been delayed for so long that many in the pensions industry have lost interest. The Pensions Authority’s repeated warnings about the industry’s lack of preparedness has not removed the limelight from more exciting issues of the day. It is understandable that heads may be buried in the sand for how do you adequately prepare for the unknown?

In no aspect of IORP II implementation is the uncertainty greater than with regards to single member pension schemes. There are a number of reasons for that:

  1. While the Department has said that the Government intends to implement IORP II without concessions to small schemes, the Directive clearly provides for implementation with due regard to nature, scale and complexity. That raises the question as to what allowances will ultimately be made.
  2. The principal focus of the IORP regime is the institutions (called “IORPs”) who provide pensions, not the schemes themselves. That distinction may be academic in the context of the trustee board of a group scheme because the scheme and its trustees/IORP largely is the one and same but is decidedly important for pensioneer trustees who provide pre-packaged pension product to the many.
  3. Square peg and round hole. The Directive was designed to protect people who because of their employment end up members of a pension scheme (“Pillar 2 pensions”). In many instances therefore, the solutions offered sit uneasily with pension products actively purchased by individuals (“Pillar 3 pensions”). 

It remains however that the IORP II Directive contains laudable principles of good governance for pension schemes which cannot be ignored.  Even in the absence of domestic legislation to give the necessary detail, the Directive itself provides important hallmarks for what is in store - even for those single member occupational pensions which were exempt from much of IORP I.

In part 2 of our IORP series, we will examine the consequences for investments.

Tommy Nielsen
Head of ITC Legal







*Please note this content is the view of the author and not of Independent Trustee Company

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