It is not clear that there will be any immediate significant legal implications for Irish occupational pension schemes of the UK exiting the EU. However, the effect on the investment market and the continued uncertainty around Brexit is likely to have more immediate and significant consequences for Irish defined benefit schemes and their sponsoring employers.

Many Irish defined benefit schemes are struggling with funding proposals that have gone off or may go off track as a result of poor market conditions. In addition, funding difficulties (and their associated impact on IAS liabilities of sponsoring employers) may trigger fresh scheme reviews and renewed focus on liability (and volatility) management.

Trustees and sponsors will need to consider with their investment and actuarial advisers what can be done to mitigate the risk of continued poor market performance in light of ongoing uncertainty during the proposed transition period. As required by the Pension Authority's financial management guidelines, an important step will be identifying the main risks schemes are exposed to and what contingency plans can be put in place to reduce any negative impact. A general review of the scheme investment strategy and investment options may also be warranted.

Sponsor covenant
Trustees of defined benefit schemes whose sponsor (or funding guarantor) may be exposed as a result of Brexit may consider it prudent to seek regular assessments of the strength of the sponsor's covenant.

Sponsors of defined benefit schemes should consider whether their general risk analysis might usefully include the potential impact of key risks on their pension schemes. This analysis should cover the impact of continued market turbulence as a result of Brexit on obligations under any funding or contingent asset agreements and the schemes' funding rules and how that sits with the impact of market conditions on the group generally. It may also be necessary for sponsoring employers of defined benefit schemes to consider liability management exercises in relation to their scheme in light of continued poor investment performance and/or the impact of Brexit on the sponsor's business generally.

Funding, Investment and related agreements
Trustees will need to obtain appropriate investment and actuarial advice in light of the particular issues facing their scheme. The current funding assumptions and investment strategy may need to be reconsidered in light of continued market turmoil. These will be issues for trustees and sponsors of defined benefit schemes and for members and trustees of defined contributions schemes. For defined contribution schemes, trustees may need to consider the appropriateness of current investment options and obtain advice on the possible impact of Brexit on investment performance.

Specific consideration will need to be given to any hedging arrangements in place and to monitoring scheme exposure in this regard. Ultimately, once the specific terms of Brexit are clarified, the agreements relating to investments, hedging and other derivative transactions will need to be considered to determine the likely impact. Scheme investments and other assets exposed to the UK market will warrant particular examination to determine whether they are appropriate and the extent to which they are enforceable. Trustees will also need to review their agreements with their service providers to ensure that post-Brexit they continue to satisfy relevant requirements (including in relation to regulation of investments, investment managers, EU administrators, insurance policies and data protection).

Cross-border schemes
Going forward, Brexit has the potential to impact on funding, tax treatment, investment and scheme governance in relation to schemes operating in the UK. From an Irish perspective, this will impact on Irish / UK cross-border schemes. Depending on the arrangements ultimately put in place, the current stringent funding regime for cross-border schemes operating between Ireland and the UK could potentially be relaxed. Questions remain in relation to the tax treatment of such arrangements and whether the post-Brexit regime will mirror the pre-IORP UK/Ireland regime. In any event, there is nothing to suggest that Ireland will not remain an attractive location for operating pension arrangements to cater for UK based employees.

Transfers
Once post-Brexit arrangements are put in place they will need to be examined to determine the extent (if any) to which transfers to the UK will differ from transfers to other non-EU arrangements.

Communications
Trustees (particularly of cross-border schemes operating in the UK) should consider whether the circumstances of their scheme warrant a communication to members, perhaps to reassure them that the risks associated with Brexit are being actively monitored.

Conclusion
From a practical perspective, other than in relation to the impact of poor investment performance, it would not seem necessary for trustees and sponsors of Irish occupational pension schemes to undertake detailed work in relation to Brexit at present given the uncertainties as to the form that a UK exit might take and what will be put in place in respect of pension related matters. However, ongoing monitoring of the situation will be important.