APTI chairman Kevin Coghlan said it was disappointed the department would not meet it before the directive was transposed into law here.
He complained that the rollout of the directive was “indiscriminate”.
The typical self-directed fund only has €450,000 in it.
The new rules mean this would restrict the investment in a buy-to-let to just €225,000, with no borrowings allowed to purchase the property.
He said: “Contrary to what has happened in other EU countries, Ireland’s implementation of the directive will work contrary to its primary purposes of protecting consumers.”
Mr Coghlan also said the new regulation would add an expensive regulatory burden to schemes.
But the department said the transposition of the directive will mean improvements to the regulation and governance of funded pension schemes.
The value of investments held in many schemes fell substantially during the financial crisis, it said.
This highlighted the need for stricter regulation and greater protections.
The department insisted that 98pc of single-member schemes are already compliant with the new rules.
Under the provisions of the directive assets must be predominantly invested on regulated markets.
The spokesperson said the new directive means small self-administered schemes, which are the only schemes currently allowed to borrow, will not be allowed to enter into new borrowing arrangements