Small self-administered pensions to partner with the State

QUESTION

To ask the Minister for Employment Affairs and Social Protection if her attention has been drawn to the potential for small self-administered pensions to partner with the State to assist with the long-term lease scheme for social housing; if she has considered the impact that a the lack of derogation will have in this regard; and if she will make a statement on the matter.

REPLY

Housing policy is a matter for the Minister for Housing, Planning and Local Government.  Any  questions or suggestions in relation to the long-term lease scheme for social housing should be directed to his Department.  
Transposition of the IORP II Directive will support positive reform of the Irish funded occupational pension sector.  Transposition will raise governance standards, improve trustee qualification and suitability, and increase supervision through enhanced powers for the Pensions Authority.  
While the Directive provides for the possibility of derogation from specific Articles for smaller schemes, I believe that members of smaller schemes should get the same protections and oversight as members of large schemes.  Money saved for pension purposes should be properly protected to ensure that people have adequate income for their retirement years.  It should be noted that Member States must apply certain provisions concerning investment rules and the system of governance to schemes which have more than 15 members.
Article 19 of the Directive sets out the investment rules for occupational pension schemes.  Assets must be predominantly invested on regulated markets, i.e., at least 50%.  This allows adequate scope for investment in instruments with a long-term economic profile and non-listed undertakings such as property and infrastructure.
Small self-administered pensions may continue to invest in the Irish economy, including property, but their investments must be properly diversified to avoid excessive reliance on any particular asset and so minimise risk in the portfolio as a whole.  Such diversification has been proven to reduce investment risk.  
The value of investments held in many schemes fell substantially during the financial crisis.  This emphasised the need for stricter regulation and greater protections, especially for small schemes investing in riskier unregulated markets.  Concerns in relation to this sector are particularly around the protection of the consumer and the money they have invested, the riskiness of investments, the charges that apply, and the standard of governance.  Accordingly, the Government has decided that the provisions of the Directive should apply to all funded occupational pension schemes.