anne maher

A sure hand on the tiller

It says much about a person when a pensions regulator heads the poll for this Award. This is what Anne Maher, chief executive at the Pensions Board in Ireland, has done. In fact, the end of her stint at the board coincides exactly with the IPE Awards, making the presentation even more appropriate. In her role, she combined being the pensions supervisor and a policy adviser to the government, as the Irish curiously and unusually mix both these functions. In Maher’s case it was an inspired combination.

As a new regulator, she took on bringing order to what must have been a quite a disorderly scene. The Irish funded pensions sector is not a world leader in assets, but the number of schemes to be supervised is 88,000 currently.

As she recalls it, there was nothing fundamentally wrong with system – very often it was just “messy administration” as she puts it. The industry came to order, as it realised she meant business on such matters as meeting deadlines and that the board was prepared to see offenders in court if necessary.

For her, one of the essential functions of supervision is the maintenance of public confidence in making pension provision. If the system is not perceived to be working effectively, why should employers and individuals commit their savings to the industry in the long term?

The great fear of any regulator is that there will be a major blow-up or scandal on their watch. “One such scandal could set us back years in terms of pensions coverage,” she points out. So far, Maher has been spared such shocks, but there have been the lessons from elsewhere and she welcomes the transparency the new accounting rules bring about reflecting sponsors’ liabilities.

But she has faced testing times during her regime, particularly after the equity bubble crash, when many Irish defined benefit funds plunged seriously into underfunding. The Irish certainly did not over-react. Maher believed in the resilience of the system and gave funds up to 10 years to implement recovery proposals. While the issue certainly has not gone away – 30% of funds are still under-funded but with plans in place – she reckons it is under control.

Maher, who firmly believes that defined benefits can deliver the best pensions ultimately to retirees, is keen to keep employers sponsoring their DB arrangements and not move to defined contribution. Though a number of high-profile employers are moving to DC, she notes with some pride that nearly two thirds of Irish DB schemes are still open to new members.

Regulatory changes are under way in Ireland, with the system likely to move to a more risk-based supervisory approach. When analysing the risks pensions face, she says that there is “an over-regulation risk to pension funds that needs to be avoided”. As she notes “if you had a flawless regulatory system, you would probably have no pension funds”.

In her role as policy adviser to the government, via the minister for social and family affairs, the board was involved in the landmark National Pension Policy Initiative that resulted in a 1998 report setting a framework that the government virtually translated completely into legislation. It resulted, among other developments, in the National Pensions Reserve Fund, which she considers to be a great success.

One policy area where the needle has stubbornly refused to budge is that of pensions coverage within the country’s voluntary system. While 1.1m of the 2m Irish workforce are covered by private arrangements and the number has increased in absolute terms, some 50% still have no such coverage. This is despite a very successful national pensions awareness campaign the board ran and the introduction of a simplified pensions provision vehicle.

This is unfinished business for Maher and the latest policy review reports from the board to the minister leave the issue up in the air whether a mandatory scheme will be forthcoming in the government’s eventual proposals after social partner level discussions. The worry in her mind is the impact on the voluntary provision of any shift to a mandatory approach.

Another concern is that as Ireland finds itself increasingly on the same pensions longevity treadmill as other EU countries with increasing dependency ratios, the country will not respond appropriately or quickly enough. It takes five years at a minimum before anything that is being discussed becomes policy and is implemented, she points out. The options narrow, the longer decisions are postponed, Maher warns.

On a European front, the development of the CEIOPS supervisors forum for pensions is welcome in her eyes, as she believes that a common market applies to pensions as well. There are issues to be resolved before pan-European pensions will be with us, such as tax treatment of contributions and the move to working on common funding principles – a longhaul issue to her way of thinking.

Maher rejects utterly the application of the EU’s Solvency II regime for insurance to pension funds, even going so far as saying “it could be the death of private pensions for us”.

One major change she has seen in her time at the board and her career prior to that directly in financial services has been the realisation of the importance of pensions in the scheme of things. “Pensions have been accepted as being a very serious issue at government and social partner level, as well as at the level of the individual.”

That this seismic shift in the public perception has happened is in no small measure due to the contribution Anne Maher has made.