Irish pension funds latch onto consolidation craze
The Irish pension system is entering a phase of consolidation, which is currently taking place organically. But experts predict this will not last long and the republic’s government will soon intervene to speed things up (Patrick Bolger/Bloomberg)
The British government has been pushing for pension consolidation, on the theory this will create “bigger and better schemes”, as pensions minister Torsten Bell recently put it at the Association of British Insurers conference.
But they are not alone in thinking this. Countries such as Sweden and the Netherlands are seeing their governments encourage pension consolidation.
So how do things fare in neighbouring Ireland, where schemes are smaller and direct regulatory intervention is more limited? According to industry stakeholders, the Irish pensions market may not be too far behind its British counterpart.
In 2025, the Irish Pensions Authority said around $37bn was held in retail and corporate master trusts, close to 45 per cent of all Irish defined contribution pension assets. Irish master trust assets grew by around 300 per cent in 2023, followed by a more modest increase of under 50 per cent in 2024.
The 300 per cent growth in 2023 was due to the Pensions Authority imposing a deadline for pension schemes to comply with the IORP II directive or wind-up, with many providers migrating single-trust schemes en masse to their master trust.
Shane O’Farrell, director of workplace markets at Irish Life, told AOX a new era of funding surpluses, maturing profiles and a strengthening of the regulatory requirements has created “a favourable backdrop for increased pension risk transfer activity” in Ireland.
At the Pensions UK conference last month Joyce Brennan, chief executive of the Irish Association of Pension Funds, told AOX it was “very hard for a DC scheme in Ireland not to be in a master trust at the moment”.
Gareth McKenna, senior consultant at LCP Ireland, agreed, adding that enhanced governance requirements and rising administration and compliance costs — driven by the IORP II directive from the EU — have accelerated the shift away from standalone arrangements.
The launch of the Digital Operational Resilience Act in 2025, which introduced targeted rules on digital risk management, forced small and mid-sized standalone schemes to deal with increased costs and operational efforts, particularly around ICT resilience, third-party oversight and incident reporting.
McKenna described this as the “final tipping point” for employers.
“Many smaller schemes have begun transitioning towards master trust providers, reflecting the growing challenge of maintaining proportionate governance structures at scheme level,” he said.
McKenna expects this trend to continue over the next three to five years, particularly among medium and larger employers reassessing the cost of standalone DC schemes. While no formal consolidation target has been set, the Pensions Authority has adopted a “comply or consolidate” approach for smaller schemes, encouraging movement into master trusts.
The recent launch of Ireland’s auto-enrolment vehicle, My Future Fund, has further bolstered the push for master trust consolidation. In less than two months, the scheme has received contributions of $117mn. Charles Coase, trustee of Dublin Airport Authority’s DC scheme, suggested it could exceed $588mn in AUM by year-end.
This will pose a crucial challenge to the competitiveness of Ireland’s master trust market. “It’ll be a benchmark against which other master trusts can be compared. If it gets to that scale within a year, it’ll overtake all the master trusts within five or six years,” Coase said.
But appetite for other forms of consolidation, such as through collective defined contribution schemes, remains limited. Aaron Kilboy, head of wealth solutions at LCP Ireland, said CDC would require legislative change and demand from employers and providers – neither of which currently exists.
“A CDC-type solution was explored as part of the development and design of My Future Fund and ultimately not adopted. This is likely to dampen any momentum around CDC in Ireland for the foreseeable future, but if the UK experience is positive in the coming years this may help the case,” he said.
The UK passed legislation allowing for the creation of CDC schemes in 2021 but so far only one such scheme exists - the Royal Mail pension.
Stephen Doherty, associate director of investments at LifeSight Ireland, said current reform efforts were focused on rolling out My Future Fund and developing in-scheme drawdown: “I expect, similar to the UK, it may come down the line after in-scheme drawdown has been up and running for a number of years.”
Whether consolidation will also drive increased investment in private markets remains uncertain. Doherty noted DC savers typically had limited access to such assets due to liquidity constraints. There is also the question of whether Irish master trusts can achieve the scale required for private market allocations.
Brennan suggested The European Savings and Investment Union, an initiative launched in March 2025 to integrate Europe's financial markets and channel household savings into long-term investments, could provide an entry point into private markets for schemes.
But the initiative, which was kick-started by the Draghi Report on EU competitiveness and which includes proposals for an EU-wide savings and investment account, is still working its way towards becoming reality.
Kilboy, however, was optimistic about the state’s ability to develop its own private market exposure, arguing that scale will not prevent larger Irish master trusts and stand-alone schemes from building meaningful allocations.
“As an example, the largest three master trusts in Ireland have $6bn to $16bn in AUM each,” he said. “Assuming 90 per cent of members are in the default strategy and providers allocate 5 to 10 per cent to private markets, they can justify a private market programme of between $235mn to $765mn each in their default strategy.”
He also expects product innovation, particularly around LTAFs and ELTIFs, to make private market exposure more possible for master trusts and standalone schemes of all sizes.
According to Doherty LifeSight Ireland was the first DC master trust in Ireland to have a strategic allocation to private equity within its portfolio, which it announced in late 2024.
Furthermore Irish Life has recently invested in TirNua Capital Partners’ first infrastructure fund. TirNua is a Dublin-based joint venture between Irish Life Investment Managers and Northleaf Capital Partners.
How long can we expect this to take? According to McKenna consolidation is likely to occur gradually through market dynamics. This contrasts with the UK where initiatives such as the Mansion House accord explicitly encourage consolidation to improve efficiency and support private market investment.
But Brennan cautioned that limited regulatory intervention may not last and that “greater government intervention is coming”.
“As My Future Fund grows in size, the state will be very interested in how it gets access to that capital,” she added.
If the UK pensions industry is any indication, then regardless of what comes next, we can be sure each scheme will have plenty to say about it.