Thousands of retirement savers run the risk of seeing their self-administered pension either run up hefty bills or have their trustees resign if they don’t comply with a new regime by April 22nd.
One-member schemes, known as executive pensions or small self-administered pension schemes (SSAPS), must comply with new EU regulations by this date. However, the new rules are deemed too onerous and compliance-heavy for small schemes, focusing as they do on detailed reporting such as annual audited accounts, risk management, restricted investments and continuing oversight.
As a result, it means that most owners of such schemes have opted to move their money to another pension vehicle such as a non-standard PRSA, join a master trust, or have the scheme wound up.
Still, experts fear that there may be thousands of pension savers who have yet to engage with the new regime – even though it was first heralded some five years ago.
RM Block
Indeed, figures from the Pensions Authority suggest that there were still 90,000 such schemes in operation as of September of last year.
IORP II
The directive on institutions for occupational retirement provision, known as IORP II, was transposed in Ireland back in April 2021. The directive is about ensuring that occupational pension schemes are sound and better protect members and beneficiaries.
The rules were introduced in 2006, but single-member schemes such as SSAPS were exempt. There was no derogation for such schemes under IORP II, however.
This meant, then, significant changes for these pension schemes, such as an effective ban on borrowing in an SSAPS. In addition, the rules meant that investments in unregulated products, such as property, loan notes and renewable energy, could not exceed 50 per cent of the value of an SSAPS.
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At the time, many argued that derogation should have again been granted to SSAPS, and that pension savers should have more control over their investments. However, while no derogation was granted, a period of time was given to one-member schemes to get their houses in order.
This is now due to end in April 2026, and many executive pension holders have made the decision to move to a new pension structure. This is because the new regime is considered uneconomical for most, with few – if any – providers offering such products under the new regime.
“You’d be paying significant fees over and above what’s worth,” says Fergal Roche, director in Davy, for an IORP II-compliant single-member pension.
Diversification is also “cumbersome” under the new regime, says Glenn Gaughran, head of business development with Independent Trustee Company (ITC), as investments in unregulated products, such as property, loan notes and renewable energy, cannot exceed 50 per cent of the value of an SSAPS under IORP II.
So SSAPS members now have to get moving and find a new home for their pension. But why have so many yet to make a decision?
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“It’s tricky; it’s a lot of work to move them,” says Roche, adding that this burden can create inertia. Other challenges include complicated investment structures, which mean that it can be difficult to transfer assets out; pension adjustment orders on schemes which need to be resolved first; or savers looking to transfer their schemes overseas.
“It’s not as simple as let’s tick a box here, and we’ll put you into a retirement bond,” says Roche, adding that there is also a financial advice component.
“It can be an arduous process, and the execution of it can be challenging,” he says, adding that Davy is trying to frame it as an opportunity for pension savers to review their overall financial situation.
What will happen if you don’t engage?
The danger for such funds is that if they don’t move by April 21st, then their funds will be subject to the full rigours of IORP II. And as this means greater risk management and compliance, it will also mean greater costs.
Gaughran says ITC was quoted costs of about €5,000 to run an IORP II-compliant scheme, while it’s understood annual costs have even reached five figures for some.
And that is if their trustee holds on to them.
Gaughran says that ITC’s “only option is to resign as trustees” if savers don’t engage.
This will leave the pension holder stuck and will create a bigger headache than if they act now.
At present, it’s building a file for each outstanding SSAPS, and is working on contacting the holders. It has also engaged with the Pensions Authority on what it should do.
Pension providers might levy significant fees if fund holders don’t do anything.
“It’s not a great outcome,” says Roche, adding that depending on the rules, some schemes might transfer you to another structure.
Or there could be possible sanctions for not complying with the new rules.
“We’re encouraging all our clients to start engaging with it,” says Roche, but he concedes that time is starting to run out, although he hopes that there might be “some leeway” on the April deadline for those who have engaged with the process.
What are the options?
SSAPS or executive pension holders have a number of options open to them – but they must take action now.
First of all, if you are not going to continue funding your pension, you could consider transferring to a buyout bond (BOB). This can be accessed from the age of 60.
Another option is a PRSA. Gaughran says this is the option most who are still contributing to a fund go for.
Non-standard PRSAs allow a lot of flexibility when it comes to their asset choice – although it should be noted that this is currently the subject of a Pensions Authority consultation, so watch this space.
Many also opted for a PRSA due to a funding change back in 2023. This allowed unlimited funding, and meant that PRSAs were more attractive than occupational schemes.
However, amid fears that the funding rules were being abused, the Government changed this from January 2025. It now means employer contributions to PRSAs are limited to 100 per cent of their earnings, and are thus less attractive than the old SSAPS.
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“I’d love to see that cap reversed,” says Gaughran.
Or you could move to a master trust.
Master trusts bring a number of such schemes together, and allow them to coexist under the new regulatory regime. However, a master trust is more rigid in terms of investments, with a focus on predominantly regulated markets.
When it comes to funding, a master trust may be more attractive, as it allows similar funding to the older schemes.
It works on a combination of salary and service and other factors, so sometimes may allow you to contribute more than 100 per cent of salary – but funding may not be as good under the master trust if you’ve no service.
Sometimes, Roche says, people will opt for both structures, splitting their pot in two.
The last option is to retire the SSAPS and put the funds into an approved retirement fund (ARF).
