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If you’re a company director or business owner in Ireland and you’ve been paying into an executive pension, there’s something you urgently need to know.
Executive pensions are being formally phased out under new regulations, with a final compliance deadline set for April 2026. Due to EU regulations (specifically the IORP II Directive), many long-standing pension arrangements used by directors and small business owners are no longer compliant with new rules.
If you have an executive pension, you’ll need to act or risk losing benefits, flexibility, and control. Let’s break down what’s happening, why it matters, and what you should do next.
Quick Recap: What’s an Executive Pension?
An executive pension is a type of pension scheme established by a company to provide retirement benefits for an individual, typically a company director or a key employee.
What made Executive Pensions so widely used:
- Allowed the company to make tax-deductible contributions on behalf of the director
- Offered flexible investment options, sometimes even self-directed
- Could be used for profit extraction from the business in a tax-efficient way
For years, it was considered the go-to retirement structure for small business owners and directors, especially those running limited companies.
The Change: Why Executive Pensions Are Ending
In 2021, Ireland adopted new EU pension legislation, known as IORP II (Institutions for Occupational Retirement Provision). This regulation was designed to improve pension scheme governance, transparency, and risk management.
However, executive pensions, particularly single-member arrangements, no longer meet the requirements set out under the new regulations.
Here’s what changed:
- No new executive pensions can be established since July 2022.
- Existing schemes must comply with strict governance rules by April 2026, including:
- Appointing independent trustees
- Conducting annual audits and producing governance reports
- Implementing risk management and internal controls
- Appointing independent trustees
These rules were designed for large occupational schemes, not small, one-person director pensions. So, complying is often too costly and complex for individual directors.
Get a Retirement and Pension Planning Quote
What Happens If You Do Nothing?
If you ignore the 2026 deadline and leave your Executive Pension as-is, here’s what could happen:
- Your pension could become “frozen”; no further contributions allowed and limited access to investment options.
- You could miss out on valuable tax planning opportunities, such as large company contributions before year-end.
- It may no longer be compliant, exposing you or your business to governance and legal risks.
- You’ll likely face increased administrative costs to meet IORP II standards, such as hiring independent trustees, preparing audits, and other related expenses.
In summary, inaction may lead to reduced flexibility, increased costs, and greater administrative burden in the future.
Available Alternatives: Master Trust or PRSA
Fortunately, you don’t have to lose your pension benefits; you only need to move your pension into a compliant structure.
Transfer to a Master Trust Pension
This is the most common route for directors. It’s a shared, regulated pension structure managed by professional trustees. You still have your own pension pot, and:
- It’s fully IORP II compliant
- Your company can still make contributions
- You avoid the hassle of audits or acting as a trustee
- Investment options remain flexible (depending on provider)
Think of it like moving into a well-run estate, your house is still yours, but someone else handles the roads and security.
Learn more about Master Trust Pension.
Transfer to a PRSA (Personal Retirement Savings Account)
A PRSA is a contract-based pension that you own directly, with no need for trustees. Recent rule changes make PRSAs even more attractive for company directors.
- From 2025, employer contributions are allowed up to 100% of a company director’s (or business owner’s) salary
- Simple, personal pension plan — easy to manage
- Great for directors who want control and portability
Learn more about PRSA (Personal Retirement Savings Account).
If you want to top up your pension tax-efficiently before the window closes, a PRSA could be ideal, especially for directors who may retire, sell their business, or become self-employed later.
Next Steps
Taking timely action will ensure your pension remains compliant and aligned with your long-term retirement goals. Here’s how to begin:
Consult a Financial Advisor
Discuss the implications of the upcoming changes and explore whether a Master Trust or a PRSA is more suitable for your specific situation.
Review Your Existing Pension Arrangements
Review your pension by considering when it was established, whether you’re still contributing, and if your projected benefits will meet your retirement needs. Don’t forget to check for old or forgotten pensions from previous jobs, even overseas pensions, such as those from the UK, may be eligible for consolidation.
Act Early
Making decisions ahead of the April 2026 deadline gives you more flexibility, greater planning options, and less last-minute pressure.
Get a Retirement and Pension Planning Quote
Get a Pension and Retirement Planning Quote
The end of executive pensions isn’t just a change in regulation; it’s a timely opportunity for company directors to reassess and strengthen their long-term retirement strategy. Delaying action could lead to missed tax benefits, limited options, or added stress closer to retirement.
By acting now, you stay in control, protect your future, and ensure your pension is working as hard as you do. At True Wealth, we can assess your individual circumstances and recommend the best course of action for transitioning your pension. We’ll also help align your retirement planning with your long-term goals, while guiding you through tax planning and wealth extraction strategies to make the most of your business and personal finances.
Get a personalised quote today and take the first step towards a more secure retirement.
We are experts in personal and business protection, savings and investments, pension tracing, retirement planning & pensions, business owner and personal financial planning, mortgages, and wealth management and extraction.
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