The deadline for transposition of IORP II (Directive 2016/2341) (the “Directive”) passed on 13 January 2019, with the Department of Employment Affairs and Social Protection (the “Department”) issuing a statement on the matter last week. According to the statement, the drafting of Regulations to transpose IORP II is at an advanced stage and the Department is working towards the transposition of IORP II into Irish law later in Q1 this year. The Department confirmed that supporting Codes of Practice will be published by the Pensions Authority, which will expand on the requirements of the underlying Regulations. A communication campaign is also planned by the Pensions Authority to provide support for trustees and industry stakeholders on the new regulatory regime.
It is disappointing that pension trustees must continue to wait for detail on the new legal requirements. However, the Department’s statement indicated that the Pensions Authority will be striving to provide “sufficient support, time and information” to trustees to allow them plan for and make the changes needed to deal with the new regime. It is hoped that the Authority will provide a ‘grace period’ to trustees as they will need time to analyse what the new requirements mean for their schemes and develop a plan on how they will achieve compliance.
Other than communicating the delay in the new law, the statement did give one significant indication on the approach Ireland will take in implementing the Directive. IORP II allows Member States to choose not to apply most of the Directive’s provisions to pension schemes with less than 100 members. The UK has chosen not to apply many of the requirements to such schemes.
The Department stated that to exclude such schemes from the provisions of the Directive would “be contrary to the policy of enhancing standards for consumers”. It also confirmed that single member schemes will no longer be permitted to enter into new borrowings once the Directive is implemented.
Whether this means that Ireland will take a “one-size-fits-all” approach to implementation without any flexibility based on the “nature, scale and complexity” of a scheme remains to be seen. However, this is probably the strongest signal yet that this is the intended approach. Such an approach would impose a heavy regulatory burden on the many small and single member schemes in Ireland, and one that may prompt a growth in master trusts.
We will be monitoring these developments closely over the coming months and further updates will follow.
Contributed by: Jane Barrett