Future occupation pension provision in Ireland is likely to be predominantly defined contribution. One of the Pensions Board’s objectives for 2013 was to review the regulation and future structure of DC provision. As part of the review the Board consulted with interested parties on the future of defined contribution (DC) pension schemes. The consultation paper indicates some potential changes that may be introduced to the DC system in 2014, including:
Minimum standard of competency for trustees
The Board is of the view that trustees’ performance needs to be improved and therefore it has proposed that trustees should be required to self-certify their competency and ability to meet specified knowledge and experience criteria before appointment and annually thereafter.
Greater level of regulation of DC Schemes
The Board proposes the introduction of legislation which will require new DC schemes to satisfy the Board that the scheme design and the trustees are fit for purpose before being granted approval. Approved older DC schemes could be given a time frame in which to comply with the provisions.
Pensions Board guidance on default investment strategies
Concerned that the investment options offered to members of DC schemes can be complex and that default investment strategies are not always suitable for the needs of members, the Board has suggested producing practical guidance on the design and governance of default investment strategies.
Changes to disclosure requirements
The Board is concerned that the information provided to members is not sufficient to help them make informed decisions and has suggested that member information should be improved to ensure that it is accurate, clear and understandable.
Greater transparency in respect of costs
The Board is examining how costs and charges borne by members of DC schemes can be more clearly and transparently communicated to them.
The Pensions Board had invited trustees, providers, managers, advisers and other interested stakeholders to submit comments on the Board’s consultation paper. These comments have now been submitted to the Board and it is likely that outputs from this consultation process will form an important part of the Board’s review of the DC system and may ultimately lead to proposals for legislative change.