Changes on horizon for Executive Pensions

The IORP II Directive is about strengthening governance, risk management and transparency across all pension schemes in Europe.

The ending of Executive Pensions on April 21st, 2026, represents a major milestone in Irish commercial life, according to Shane Tobin, CEO of financial planning and wealth management service True Wealth.ie and Lowquotes.ie.

 “It is a huge milestone. Executive Pensions were the cornerstone of retirement planning for company directors and business owners for decades. Now, with around 127,000 single-member schemes and over €10 billion in assets needing to move, this is one of the biggest pension transitions we’ve seen in Ireland.”

For directors of SMEs in particular, it means a complete rethink of how they fund retirement. “So yes, this marks a real turning point in Irish commercial and financial life.” 

The IORP II Directive is about strengthening governance, risk management and transparency across all pension schemes in Europe. 

“The EU wanted to ensure that pensions are run to a high standard, with independent oversight, regular audits and proper risk controls. While that makes sense for big multi-member schemes, it doesn’t work in practice for single-member Executive Pensions, which is why they’re being phased out.” 

Shane Tobin, CEO of financial planning and wealth management service True Wealth.ie and Lowquotes.ie.

While the Pensions Authority has set out the rules clearly, from the perspective of many business owners, the communication has not always been strong enough. 

“There are still thousands of directors who don’t realise that their pension scheme will effectively expire in April 2026. More could be done to raise awareness outside of the financial services industry so that affected individuals take action early, rather than scrambling at the last minute.” 

Given that there are nine parts to the regulations, a considerable amount of work will be necessary to ensure that schemes are compliant. 

“For anyone trying to keep their scheme compliant, it’s a mountain of work. You would need: Independent trustees; Annual audits; Risk management frameworks; and detailed reporting. That’s simply not realistic or cost-effective for a one-person scheme. Which is why the practical reality is that most executive pensions will be wound up and transferred to a compliant alternative like a Master Trust or a PRSA. Again, advice here is critical,” he says.

If you do nothing, your pension stops working for you 

While the deadline of April 2026 is still several months away, it appears that those affected are not yet adequately prepared for this major change. 

“Many advisers and providers are preparing, but a large number of directors and scheme members aren’t fully aware. We’re now less than six months from the deadline, and the worry is that a significant volume of transfers will be left until the last minute. That could create bottlenecks and delays, which is why we’re advising people to act sooner rather than later.” 

He adds that because many of those affected will be in long-term arrangements, contacting clients may prove challenging for the life companies.

If those affected do nothing, the scheme risks being frozen, Shane points out. 

“That means you can’t make further contributions; you lose flexibility on investments; and you may face higher admin costs. In short, your pension stops working for you. It’s money just sitting there, not being optimised for retirement. Schemes do not automatically transfer into a Master Trust if you do nothing.” 

He outlines the position as it stands under IORP II: Single-member Executive Pensions set up before 22 April 2021 must either: Restructure/transfer into a compliant arrangement (e.g. Master Trust, PRSA, or another approved vehicle), or Wind up. 

“If you take no action by April 2026, the scheme will not auto-transfer. It will effectively be frozen, you can’t make new contributions, you lose access to updated investment options, and you may still face governance costs.” 

Over time, it risks becoming a costly, inflexible pot that’s just sitting idle, he says. 

“The responsibility is on the employer/trustee/member to initiate a transfer. Providers are encouraging moves into their Master Trusts. But it’s not automatic, you need to sign off and give instructions.” 

The two best options  

As to what the different options open to people are and which are the best, Shane Tobin explains what is involved in some of the main alternatives. 

1. Master Trust: A large, multi-employer scheme run by professional trustees. Governance and compliance are handled centrally. You keep the tax benefits, but you have less personal control than you did with an Executive Pension (e.g. fewer options for direct property or bespoke investments). What’s lost: Personal control.

The difference is really about investment control and scheme governance:

2. Executive Pension (old style): You could set it up as a self-directed arrangement. That meant you (as trustee) could decide to buy direct property (a unit, office, or warehouse) or create a tailored investment portfolio of shares and funds. The scheme rules were flexible because you were effectively in the driver’s seat.

3. Master Trust (new style): A Master Trust is run by a professional trustee board. To manage compliance and risk across thousands of members, the trustees limit the investment menu. Typically, you’ll get a range of pooled funds, lifestyle strategies, ESG options, etc., but not the ability to go off and buy a property or set up a bespoke portfolio in your own name. That “hands-on” trustee role you had as a director is gone.

“So the trade-off is: Executive Pension – Maximum control (property, self-directed, bespoke) but heavy governance and compliance burden. Master Trust – Much easier compliance (all governance handled for you), but less flexibility in investment choice.

4. PRSA (Personal Retirement Savings Account): Since the Finance Act 2022, PRSAs have been transformed. From 1st January 2025, employer contributions are capped at 100% of the employee’s emoluments for that tax year. Any excess is a Benefit-in-Kind for the employee and not deductible for the company. 

Crucially, the employee’s own contributions are still governed by the age-related % limits and the €115,000 earnings cap, and employer contributions don’t eat into those limits.PRSAs are portable, flexible and avoid governance headaches completely. 

“For most directors and executives, the PRSA is now the most straightforward successor to an Executive Pension. A Master Trust may suit those who want the structure of an occupational scheme, but for simplicity and flexibility, PRSAs are leading the way.” 

Shane concludes that the April 2026 deadline isn’t just a compliance hurdle, it’s an opportunity to modernise retirement planning. “By acting early, directors can transition smoothly, maximise tax efficiency and make sure their pension is fit for the future.” 

Providers (insurers/pension companies) are already preparing for April 2026. They plan to migrate existing Executive Pensions into their Master Trusts. To do that, they’ll send the employer/director a participation agreement to sign. 

If the employer signs, the scheme transfers into the provider’s Master Trust and contributions can continue. If the employer doesn’t sign, the scheme can’t legally continue. In that case, the scheme will be wound up and the assets moved into a suitable alternative vehicle (often a Buy-Out Bond or PRSA, depending on the provider).

“So while providers will ‘default’ schemes into Master Trusts as their standard route, it still requires action from the employer and advice from a qualified advisor. If that action isn’t taken, the fallback is winding up and transferring to a different compliant structure, not leaving the money frozen indefinitely. So, it’s much better to engage early and choose the option that best suits your needs.”