Behind the Data – The Role of Master Trusts in the Irish Pension Fund Sector

Daniel Martin and Reamonn Kennedy*
June 2026

This Behind the Data finds that the Irish pension fund sector is becoming increasingly concentrated in a smaller number of multi-employer pension funds, known as master trusts. Master trusts typically invest indirectly via investment products issued by Irish insurance corporations, strengthening the linkages between the pension fund and insurance sectors.

The Irish pension fund sector has traditionally been characterised by a large number of small pension funds, but following the implementation of the Institutions for Occupational Retirement Provisions (IORP) II directive in April 2021 this is changing. IORPs II aimed to harmonise standards across Europe and introduced new requirements on occupational pension schemes regarding governance, risk management and investment. The law extended coverage to previously exempt single member arrangements (i.e. pension schemes for a single person). Although this applied to new single member schemes immediately, the new rules on investment and borrowing were not mandatory for existing single member schemes, and existing schemes had five years to comply with all other rules. The Pension Authority expected full compliance from new single member arrangements and master trusts by July 2022, and other schemes not specifically exempt by start of 2023.

Consequently, the total number of pension funds has been decreasing, driven by the smaller (often single member) funds which account for the vast majority of reporting schemes winding up. Both membership and assets are becoming more concentrated in multi-employer master trust schemes, particularly for active members. This ongoing shift addresses a risk highlighted in the OECD review of Irish pensions that governance and management weakness in DC arrangements were compounded in the Irish case by the prevalence of small schemes with few members.

The move towards master trusts is altering the balance sheet composition of Irish pension funds. Master trusts typically invest indirectly via investment products issued by Irish life insurance companies (e.g. unit linked insurance products (ULIPs¹)). Looking through these holdings notably increases Irish pension fund exposures to equity markets as well as geographic links to the US and euro area. These indirect investments bring master trusts more in line with the balance sheet composition of the ‘other large fund’ group as well as typical investment behaviour of euro area pension funds.

The Data

Data on occupational pension funds in Ireland is collected by the Central Bank based on ECB Regulation 2018/231. This includes quarterly balance sheet breakdowns from 2019 Q3 and annual information on membership from 2019.

Throughout this analysis we consider pension funds in three groups: (1) master trusts, (2) other large funds, (3) smaller funds. As some pension funds in groups (2) or (3) may wind up and transfer their assets to a master trust (group 1), a cautious approach is needed when making time series comparisons between the groups. What may appear as faster growth across time for one group relative to another may reflect assets moving between groups rather than out-performance of investment decisions by that group.

Recent History of Irish Pension Funds

The Irish pension fund sector has traditionally been characterised by many small pension funds. Single employer schemes are very common, in contrast to the euro area where multi-employer scheme systems are the norm. Consequently, Irish pension funds accounted for 62 per cent of the total number of euro area pension funds as of Q4 2025, despite Ireland accounting for only 3.9 per cent of euro area total assets.  This has started to change since the introduction of the IORPs II directive, which increased compliance costs and encouraged consolidation, particularly for single member schemes which were previously exempt. 

Master trusts have proven a popular way to manage the cost burden from IORPs II for single member schemes. These are defined by the pension council as multi-employer defined contribution pension schemes established under trust and there are currently 17 in the Irish market.

Pension fund assets have also become increasingly concentrated since IORPs II was introduced. The 20 largest pension funds (including master trusts and large single employer schemes) increased their share of total assets from 37 per cent to 47 per cent in Q4 2025.

This increased concentration creates a risk for Irish pensions as exposures across the sector become more homogenous. However, it also comes with positives as larger pension funds benefit from economies of scale when investing, and can spread their costs and build up industry and investment knowledge which could be more challenging for smaller providers. 

Changing Pension Fund Membership Composition

Pension fund membership numbers³ have continually grown since the time series began in 2019, but this aggregate increase covers differences within the reporting population. Master trusts have accounted for almost all membership growth across the period, via organic growth and movement of smaller schemes into master trusts. The share of total pension fund members in master trusts increased from 2 per cent in 2021 to 44.5 per cent at end 2025. The smaller fund group has seen their membership decline across this period, primarily through active members (i.e. those who are paying in to the pension fund).  

The move towards multi-employer master trusts is reflected in the continually increasing number of schemes per pension fund as the overall pension fund population has declined. As of Q4 2025, 17 master trusts make up 83.7 per cent of underlying sponsors (i.e. one or more employers or self-employed people) within our population, with a median of 128 sponsors per fund. Smaller funds continue to have a median sponsor number of 1, while other large funds have a median of 3. This notable shift brings Ireland closer to the multi-employer scheme system prevalent in the euro area.

The Role of Master Trusts in the Aggregate Pension Fund Sector Balance Sheet

Master trusts were present in the Irish market prior to IORPs II, but their share of total assets has notably increased. When IORPs II was signed into law in Q2 2021 master trust assets were €1.3bn or 1 per cent of total assets. By Q4 2025 master trust assets had reached €40.8bn, equivalent to 28 per cent of total pension fund assets (Chart 2). 

With the movement towards master trusts driving the trend of increasing concentration of assets in the sector, the share of assets within the other large fund group has fallen in recent quarters. As of Q4 2025, there were 9 master trusts amongst the 20 largest pension funds.

This divergence between master trusts and other large funds highlights the importance of analysing the groups separately across time and understanding the investment strategy of master trusts. Chart 3 shows that master trusts invest almost all of their assets into technical reserves, typically linked to their insurance corporation parent. This contrasts with the other large fund group where direct investments via debt securities and equity are more relevant, in line with other euro area countries.

These technical reserves refer to policyholder claims against an insurance corporation which are linked to a specific pool of assets on the insurers balance sheet. In the Irish case these are typically unit-linked products which operate by investing an agreed amount in unit-linked bonds or funds with the investment risk borne by the policy holder.

The differing investment strategies of master trusts and other large funds suggests that as Irish pension fund assets become more concentrated amongst a smaller number of large pension funds the balance sheets may not shift towards direct investments, as is typical elsewhere in the euro area, but will instead become more concentrated in technical reserves, further enhancing the interconnectedness of the pension fund and insurance sectors.

The smaller funds group mostly invests indirectly via investment fund shares/units and technical reserves. This passive investment strategy allows these small pension funds to diversify their holdings indirectly through the investments of insurance corporations or investment funds and benefit from the market knowledge and economies of scale these entities have built up.

Looking Through Technical Reserves

The prevalence of technical reserves for master trusts creates challenges when trying to understand the risks they face strictly through their direct balance sheet holdings. This will be exacerbated if master trusts continue to grow and their preference for investing in technical reserves does not change.

Insurance statistics collected by the Central Bank can be used to ‘look-through’ these technical reserve holdings issued by Irish insurers⁴ (with methods in line with ECB research). Technical reserves issued by Irish insurers account for over 80 per cent of master trusts’ assets, so the ‘look through’ approach provides significant clarity on what pension funds are indirectly investing in.  A limitation of this approach is that it assumes pension funds invest in a representative sample of all insurance corporation assets, whereas assets invested in via technical reserves may differ to other assets on insurance corporation balance sheets. ULIPs are an important balance sheet component for Irish insurance corporations, accounting for 68 per cent of total liabilities in 2025 Q4. Since IORPs II was signed into law, ULIPs linked to Irish pension funds have accounted for 18 per cent of the growth in insurance corporation liabilities.

The look-through analysis shows that for master trusts, equities account for 40 per cent of the indirect asset holdings, with investment fund shares (26 per cent) and debt securities (22 per cent) also key indirect investments. For non-master trust pension funds, the equity share is higher (46 per cent) while investment fund shares are lower (17 per cent).  These indirect holdings give Irish pension funds greater exposure to equities than is typical at a euro area level, but the euro area share is likely an underestimate as this only includes direct holdings of equities while euro area funds also invest indirectly, typically via investment funds.

The look-through to insurance corporations’ assets also changes the geographical exposures of pension funds. For the master trust group, equity exposures are concentrated outside the euro area (85 per cent of total), particularly in the US. Debt securities are typically linked to euro area counterparts (75 per cent). Investment fund shares and units however are primarily linked to Irish funds. This is a form of indirect holdings and the underlying geography and assets held by the investment fund may differ. The pattern is consistent for non-master trust pension funds in Ireland.

These indirect links suggest that as the Irish pension fund sector becomes increasingly concentrated in the small number of master trust pension funds the direct exposures will appear to be largely Irish and to the insurance corporation sector. However, pension funds will be indirectly exposed to international markets for debt and equity, particularly the US and euro area, and monitoring these links will be key to understanding risks to household pensions.

Conclusion

The Irish pension fund sector is increasingly concentrated in a smaller number of pension funds, with multi-employer master trusts accounting for a greater share of assets and pension fund members. The composition of the aggregate pension fund balance sheet is changing as master trusts invest nearly all their members pension contributions indirectly through Irish insurance corporations. Looking through these indirect investments, master trusts primarily invest in non-resident equity and debt securities, as well as investment fund shares/units which typically have a domestic counterpart. 

*Email [email protected]  or [email protected] if you have any comments or questions on this note. Comments from Marco Moreno, Jenny Osborne-Kinch, Barra McCarthy, Lána Salmon and Jean Cassidy are gratefully acknowledged. The views expressed in this note are those of the authors and do not necessarily reflect the views of the Central Bank of Ireland or the ESCB.  

[1] ULIPs are policies issued by insurance corporations where the policyholders future claims depend on the performance of a pool of assets in which the policyholder’s funds are invested.

[2] Various thresholds were tested for the other large funds category to confirm robustness of results.

[3]Membership figures referenced include entities subject to Central Bank reporting requirements. The residual population, which account for approximately 5 per cent of total assets, are not included.

[4] Note: Equivalent splits for non-resident links are not possible due to data availability