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EU reporting requirements for pension schemes in Ireland

Defined Contribution|Pensions Risk Management|Pension Board and Trustee Consulting
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March 26, 2019

This briefing update considers the new reporting requirements affecting pension schemes in the EU with specific detail in relation to Irish based schemes.

What is happening?

New EU reporting requirements that affect occupational pension schemes are being introduced. The new requirements lead to a need for national authorities – in Ireland, the Pensions Authority and the Central Bank of Ireland (referred to below as ‘the authorities’) – to report certain statistical information concerning pension schemes.

This is an evolving news item and the detail below summarises our understanding of the current position.

How does this affect individual pension schemes?

The authorities will require information in respect of Irish pension schemes so that they may comply with their new requirements. Achieving this means that this information will need to be collected from pension schemes themselves.

The new requirements apply to defined benefit (DB) and defined contribution (DC) occupational pension schemes and trust Retirement Annuity Contract's (RAC), including those that are frozen or in the course of winding up. Contract based pension arrangements, including Personal Retirement Savings Account's (PRSA) and non-trust RACs, are not impacted.

Why is this new reporting being introduced?

The new requirements were announced in 2018 by the European Insurance and Occupational Pensions Authority (EIOPA) and the European Central Bank (ECB) who between them have interests in more data for monitoring, analytical and statistical purposes.

Does the same level of reporting apply to all schemes?

The authorities have agreed a common list of schemes that will be subject to detailed quarterly and annual reporting requirements (which we refer to as 'full reporting'). Schemes not on that list are subject to lesser (we say 'reduced reporting') requirements. These are typically smaller schemes. Within the list of schemes that are subject to full reporting, there is a very small subset of very large schemes that have additional reporting obligations.

Can this change in the future?

Yes. The authorities are required to ensure that at least 75% (rising to 80% by 2022) of all assets are captured in the full reporting.

What information will need to be reported?

The authorities have provided information on the content and format of reporting for pension schemes1 (available on their websites). However, some of the detail remains ambiguous in an Irish context and needs clarification.

The authorities are organising information sessions in late April to assist pension schemes in their understanding of the templates that are required to be completed.

What might be required from schemes that are subject to full reporting?

Subject to the detail from the regulators, when it emerges, we currently anticipate that the full reporting requirements might look something like this:

Reporting Requirement Frequency
Detailed split of asset categories Annually and Quarterly
Line-by-line information on assets held Annually and Quarterly
Liabilities, including reserves and margins (DB only) Annually
Detailed breakdown of investment income and scheme expenses Annually
Membership information and reconciliation Annually
Financial information such as contributions and benefit payments Annually
Liability movement and details of assumptions (DB only) Annually
Sponsor financials: value on balance sheet and right to reclaim funds (expect DB only) Annually
Security mechanisms in place (expect DB only) Annually

What will the reduced reporting requirements involve?

For schemes subject to reduced reporting, there will be no quarterly reporting and the annual reports will largely relate to membership numbers and high level financial information such as asset values and splits, contributions and benefit payments; with reporting of a single liability measure for DB schemes.

How will this information be gathered?

The Trustees of the pension schemes are responsible for providing the information. The authorities are looking at gathering this information through either the registered administrators or other entities. However, there is no finalised position on this yet. The reporting places a big reliance on the pensions industry to generate high volumes of information within short time periods, and will cause pressures across the board. For example:

  • Where full reporting is required, it is expected that the level of detail involved will require new reporting structures to be put in place, with a likelihood that there will be an additional, potentially material, cost burden on these schemes.
  • Where reduced reporting is required, the reporting is likely to cover items that are already assembled for other purposes so that, aside from timings, the impact on administration and cost should not be significant. However, if your scheme only produces an abbreviated annual report, the reporting may include items not already assembled, so there may be a greater impact on administration and cost.

When does this come into effect?

For schemes subject to full reporting, the effective date of the first quarterly report will be 30 September 2019, with the report due by 9 December 2019 (10 weeks after quarter-end).

Where reduced reporting applies, the first effective date is the scheme year-end falling in 2019, with delivery being due by 19 May 2020 (20 weeks after calendar year-end). From 2020 onwards, reduced reporting information is due 20 weeks after scheme year-end.

Note that this turnaround is much tighter than is currently in place for annual Trustee accounting work.

Will turnaround times change in the future?

The reporting timeframes will reduce each year, with quarterly reporting reducing to 7 weeks after quarter-end by 2022 and annual reporting reducing to 14 weeks after year-end, also by 2022.

What should Trustees do now?

Trustees should:

  • Agree with investment managers and actuaries how asset and liability information will be prepared and delivered for reporting purposes
  • Begin discussions with registered administrators about their anticipated role
  • Review any service level agreements to ensure that the new requirements are covered.

The authorities have confirmed that they will be hosting information sessions and workshops shortly and we will keep you up to date with any developments. In the meantime, if you have any questions, please do not hesitate to contact your Willis Towers Watson consultant.

1. Schemes will need to submit quarterly and annual data in an XBRL (eXtensible Business Reporting Language) file format. Additional information on the XBRL taxonomy being utilised, including reporting templates, is available on the EIOPA website.