IRELAND has an enviable reputation globally as a place to do business. We benefit greatly from having a developed legal system, lack of corruption, political stability, a developed tax code, deep international connections, an educated work force and a probusiness culture.
Stability is expected, above and beyond anything else business requires stability and as a country we are dogged in providing it. Stability allows for planning and the prudent deployment of capital. For the most part we get this right and have built our reputation internationally on it.
However, on rare occasions we get things very, very wrong – when we do, we need to have the courage to change course and the gumption to call for accountability. Right now, we are in the eye of one of these occasions. It’s the culmination of a series of grievous misjudgements, bad decisions, lack of diligence or understanding in some parts.
In others, it’s the cynical outcome of an unsavory power play by those who should know better and realise it is their place to serve and not be served by the industry at large.
Those who thought it prudent to disregard the existing, developed and functional Irish pensions market and transpose the European IORP II Directive without continuing the derogation exempting smaller schemes from certain governance provisions as had long existed under the existing IORP regulations, at best showed a critical lack of understanding of the domestic pensions landscape.
This however, pales in comparison to the cack handed incompetence shown in the implementation of the new rules.
Apparently irked by the industry and its continuity in anticipation of a revised PRSA product capable of replacing existing one-member arrangements, the Pensions Authority earlier this month, out of the blue, threatened to prosecute those involved in one member arrangements causing the instantaneous withdrawal of these schemes by the life offices across the market.
This not only locked out the 1,000 people a month availing of them but also, in practical terms, shuttered a large proportion of most Financial Brokers’ businesses. This is simply unacceptable and displays a flagrant disregard for the principles on which business and enterprise in Ireland is conducted.
The industry has quietly and patiently waited on Government and the Pensions Authority to deliver a revised PRSA product capable of replacing existing one-member arrangements.
This was expected in last year’s Finance Act and as yet has not materialised. This in itself is a sub optimal solution which tears up an evolved set of rules codified in the Revenue Pensions manual and replaces them with a largely failed, expensive and inflexible product in the form of the PRSA.
Rather then serving the consumer and the market in general, using the PRSA as a base product simply serves to shift power to a fledgling regulator with tough-man pretentions which thus far, has proven their ability to substantially disrupt the market, as opposed to supervising its function.
Any future revision of the PRSA must involve substantial industry consultation in a manner such as would be understood from how the Central Bank conducts its business and indeed consultation with Revenue who have a genuine understanding of developing pension rules and guidance.
Right now we are in an unnecessary mess which requires urgent attention. Accountability is required at the highest level politically, in the Departments and in the Pensions Authority.