The Socially Responsible Pension

What an interesting 16 months the Irish pension sector has faced. Not only are we dealing with the lasting effects of the Covid 19 on our economy and investments as a whole, but 2021 has also brought the implementation of the IORP II Directive, an EU directive requiring pension schemes to take additional steps to improve governance, risk management, investment strategy and communications to members.

So, what is Socially Responsible Investing, and how do we implement it here in Ireland?

In recent times the number of investors calling for their money to make a positive impact on society have increased. Most notably, due to the housing crisis we are currently facing, we have seen a surge of interest in investing in social housing. ITC’s self-administered investors are governed by pension rules which encourage long-term thinking, and this makes them excellent landlords.

Once a property is purchased, long-term leases of between 10 and 25 years are established with the local authority. Speaking to Conor O’Shea of Housing Together, he explained there are many advantages of this type of lease, such as:

• These are Irish Government-backed leases.
• Local Authority is the lessee and is responsible for internal maintenance.
• No management of tenants or voids.
• Rent reviews every 3 years, linked to inflation.
• Rent paid to investor’s pension fund directly from the local authority.

With over 61,000 households on the social housing waiting list, it is broadly accepted that there is a need for investment in social housing. “Housing Together sources residential property for self-administered funds in private developments. This type of mixed housing helps to create a more cohesive society and gives people from different social and economic backgrounds access to the same level of State services, particularly schools” says O’Shea.

The role of self-administered pensions in this area is rapidly gaining prominence with social housing schemes due to the long term returns for investors and the Socially Responsible Investing message.

In ITC, though we do not provide financial advice, we are always in favour of facilitating the widest possible choice of investments, ensuring they comply within Revenue rules.

If you are interested in investing in social housing, contact your financial advisor or email justask@independent-trustee.com for more information.

Edel McCann

ITC Solicitor