IROPS II Directive & Impact On Single Member Executive Pensions

(23 Jan 2019)

Just a short note to mentioned a new European Directive which was introduced on the 13th of January 2019 that should transpose into Irish Law at some stage in the next 5 months. The Department of Employment Affairs and Social Protection (DEASP) signalled that the derogation which is currently afforded to Small Self-Administered Pensions (SSAPs) under the IORP I Directive will not be provided for in the new IROPS regulations, thus leaving pensions of this nature in limbo for the moment. 

Our understanding is that the new legislation is prospective and will not impact existing SSAP pensions. 

The new Directive as we understand it will mean that a SSAP will be bound to specific investment rules namely:

  • Borrowing in SSAPs will no longer be allowed.
  • SSAPs will be required to invest a minimum of 50% of the scheme in assets that are tradeable on regulated markets. 

This will greatly restrict SSAP choice and flexibility with regards to how a SSAP is invested. We dont think that this development is a good idea for the industry.    

APTI (Association of Pension Trustees of Ireland) is lobbying intensely to retain the derogation, but at this point the outcome is very uncertain.

As soon as we have a better understanding and a further update we will publish the outcome. 

Paul Ryan Pension & Financial Consultants Ltd. is regulated by the Central Bank of Ireland.

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