The Pensions Authority's (the Authority) new Supervisory Review Process (SRP) is a key part of its enhanced regulatory framework for prudential supervision of occupational pension schemes in Ireland. The SRP involves a comprehensive assessment of a scheme's compliance with the governance and risk management requirements of the Pensions Act (the Act), as amended by the IORP II directive. The SRP applies to all occupational pension schemes, regardless of size, nature, scale or complexity. The Authority intends to review every scheme over the next few years with larger schemes likely to be selected in 2025.
The SRP is a forward-looking and risk-based approach to supervision, which aims to protect the rights of members and beneficiaries and ensure the stability and soundness of schemes. The Authority has broad powers to request information, documents and explanations from trustees, employers, registered administrators and their agents, and to enter premises, examine records and remove and retain documents. The Authority can also appoint an independent expert to prepare a report on a scheme's compliance with the general governance requirements of the Act.
The SRP can be a daunting and challenging process for trustees, as it requires them to provide extensive information and documents, attend an interview with the Authority and respond to any findings or required remedial actions. However, with proper preparation and advice, trustees can turn the SRP into a positive opportunity to demonstrate their good governance and risk management practices and address any gaps or weaknesses.
The SRP consists of five stages:
- Stage 1: The Authority initiates the process by issuing a letter to the trustees, requesting information and documents that the trustees are expected to have immediate access to. From our experience, the trustees may have up to 15 working days to respond and upload the documents to the Authority's platform.
The information and documents cover a wide range of areas, such as:
- scheme details and data
- trustee details
- experience
- fitness and probity and training
- scheme governance and operations
- service provider names
- duties and contract details
- scheme documents, procedures, contracts, board minutes, agendas and policies
- Stage 2: The Authority reviews the materials provided at stage 1 and identifies any gaps, perceived risks and potential non-compliance. The Authority then issues a detailed questionnaire with 40 or more probing questions, relating to each risk area. The trustees have to support their answers with documentary evidence. Based on our experience, the trustees may have just under a month to respond.
- Stage 3: We understand the Authority invites the trustees to attend an in-person interview at the Authority's offices. The current expectation is that the trustees will have to make a PowerPoint presentation to the Authority at the start of the interview, addressing the questions raised by the Authority on the potential risks to the scheme.
From our experience, the trustees must provide their presentation to the Authority two weeks in advance. The presentation is intended to be for just 15 minutes, followed by an hour of questions from the Authority but this may vary on a case-by-case basis. The interview is an opportunity for the trustees to demonstrate their knowledge and understanding of the scheme and its governance and risk management processes.
- Stage 4: The Authority furnishes a preliminary findings report to the trustees based on the information and documents provided and the interview. We currently expect the report to list where, in the Authority's view, there is non-compliance and/or weaknesses or deficiencies in the scheme's governance and risk management systems. It is likely the report will also suggest remedial action to address the issues identified (if any) and specify proposed timelines for fixing them.
We understand the trustees will be given the opportunity to comment on the preliminary findings, to correct any factual errors or to explain a matter in more detail. The Authority may require the trustees to arrange for an external report by an independent expert if the information provided by the trustees is not sufficient to determine compliance with the general governance provisions of the Act.
- Stage 5: The Authority issues a final findings report to the trustees, taking into account the trustees' comments and any external report. The final report either confirms that the SRP is complete and no further action is required, or reiterates any adverse findings from the preliminary report. The Authority may inform the trustees of an intention to issue a formal advisory notice, which will specify the issues, the required actions and the deadline for remediation. While not legally binding, an advisory notice is likely to be treated as such by the trustees.
The SRP is a new supervisory tool for the Authority and it is still developing its approach and expectations. The Authority may publish guidance or findings on SRPs in the future, which will help trustees to understand what the Authority is looking for and how to comply. The Authority is also expected to act proportionately, having regard to the size, nature, scale and complexity of the scheme and the circumstances in which it is operating.
The SRP is also a new and challenging process for trustees, who must comply with tight deadlines, provide extensive information and documents, and face a potentially lengthy and intrusive supervisory engagement. The SRP can also have significant consequences for trustees, who may face enforcement action, reputational damage or legal claims if they fail to address the issues identified by the Authority.
How can we help?
At A&L Goodbody, we have a dedicated Pensions Disputes and Investigations Group, with experts who have direct experience of advising trustees on the SRP. We can help trustees to prepare for and navigate the SRP process by:
- conducting a gap analysis and advising on any remedial actions to ensure compliance with the Pensions Act and the Authority's expectations
- developing a document and response management process to ensure only appropriate and consistent material is provided to the Authority in a timely manner
- assisting with understanding the Authority's questions and producing clear and accurate responses
- running a mock interview and preparing a comprehensive Q&A document to help trustees to acclimatise to the process and to answer any queries
- engaging with the Authority on behalf of the trustees, where appropriate, to negotiate the scope, timelines and confidentiality of the information and document requests
- advising on any privilege or confidentiality issues that may arise in relation to the information and documents provided
- reviewing the preliminary and final findings reports and advising on any submissions or challenges to the Authority's findings
- advising on any remedial actions required by the Authority and assisting with their implementation.
- advising on any enforcement action taken by the Authority and assisting on engagement with the Authority
If you would like to find out more about how we can help you with the SRP process or any other investigatory process in relation to your pension arrangement, please contact David Francis, pensions partner or your usual Pensions Disputes and Investigations Group contact. We look forward to hearing from you.
Date published: 20 February 2025
