Thanks to Steve Goddard for bringing this curiosity to my attention. It was not long ago that one of the chief sources of revenue for SIPP managers was creaming off interest on client accounts to subsidize other activities or simply improve margins. It now looks as if holding cash will be seen as a liability.

The Bank of Ireland (BOI) is to charge a negative interest rate of 0.65 per cent on ‘specialised accounts’, which includes accounts held by pension schemes.

Irish schemes will be impacted by the change if they hold an account with the BOI, which many do for basic transactions and liquidity purposes.

In a letter sent to a trustee firm seen by European Pensions, the bank said that a negative rate will apply to the credit balances of specialised accounts from 15 September 2020 of -0.65 per cent per annum. The amount of negative interest owed will be debited on a monthly basis.

Explaining it decision to impose the negative interest rate, the letter stated: “You may be aware that European interest rates have been negative for a number of years and have been forecast to remain negative for some time. This represents a cost for the bank in relation to keeping customer money on deposit. Given the sustained negative market interest rates, we unfortunately are not in a position to maintain today’s interest rate.”

Irish Association of Pension Funds (IAPF) CEO, Jerry Moriarty, said the move is a “concern for trustees”.

“It is a concern for trustees that the assets that are meant to be ‘safe’ such as government bonds and cash are guaranteed to lose value. Trustees need to maintain back accounts to ensure they have sufficient liquidity to manage payments to members and pay suppliers of services,” he noted.