While the exact timing and mechanisms of the UK withdrawing from the EU have yet to be determined, the impact has already been felt by many pension schemes both in the UK and beyond. Volatile markets, rising annuity prices and historically low bond yields have meant that many DB schemes will have to revisit their current investment and funding assumptions.
From a legal perspective, Brexit may have an impact on cross-border schemes and the ability to transfer benefits between Ireland and the UK via devices such as QROPS (schemes based outside the UK which are able to accept transfers from the UK under HMRC rules). When the UK is outside the EU, there is no certainty on whether bilateral agreements between Ireland and the UK will still stand.
Many service providers such as fund managers and investment advisers operate in Ireland on the basis of EU passporting rules on the free movement of services. Their ability to provide services in Ireland may be affected in future if they do not have a branch or subsidiary which is authorised and regulated in the EU.
Moreover, the UK has been an ally in the EU in that our legal pension structure is quite similar (both having common law trust structures) compared with the civil law structure more widespread in the EU. This has assisted Ireland in negotiations such as on the IORPs II Directive and proposed solvency requirements. In future the Irish pensions industry may struggle to have its voice heard on matters which could uniquely affect the pensions landscape in Ireland.