As with the iorp i directive, member states can choose to exempt schemes with less than 100 members from much of its scope, but iorp ii further provides that schemes with more than 15 members must be subject to much of the general governance and prudent person investment requirements. Jun 17, 2011 an iorp operating crossborder is subject to the notification procedure set out in the directive. Directorategeneral for financial stability, financial services and capital markets union 6 article 63 of directive eu 20162341 does not specify a specific place of establishment for the sponsoring. This practice note looks at the directive on the activities and supervision of institutions for retirement provision iorps, also known as the iorp ii directive, which was implemented into uk law on january 2019 building on the original iorp directive adopted in june 2003, which set out a pan. Institutions for occupational retirement provision iorp directive 200341ec law details information about directive 200341ec including date of entry into force and links to summary and consolidated. Directive 200341ec on the activities and supervision of institutions. Occupational retirement provisions directive iorp 2. In view of demographic change, sustainability and adequacy, the overall goal should be promotion of occupational pensions. The pensions authority iorp ii considerations for trustees. With the implementation period running slightly ahead of, but largely in parallel to, the uks brexit negotiations, it is not yet clear how if at.
The iorp directive took far too long to become european law. A pension scheme in the context of the iorp directive is an agreement laying down the pension promise to. Directorategeneral for financial stability, financial services and capital markets union 6 article 63 of directive eu 20162341 does not specify a specific place of establishment for the sponsoring undertaking. You can find the iorp ii considerations for trustees document under related files below and it has also been published to the iorp ii directive page of the website, see here.
Occupational retirement provisions directive iorp 2 transposition status. Pensionseurope issued a short press release welcoming this agreement. In 2003, the iorp directive was adopted, establishing the european prudential framework for occupational pension funds, and setting principles designed to secure the retirement income of europes citizens provided by iorps. Iorps directive the iorps directive, which was published on 23rd september 2003 is required to be implemented by the member states by 23rd september 2005. Institutions for occupational retirement provision directive 20162341 is a european union directive designed to create an internal market for occupational retirement provision. The directive should focus on the activities and the risks borne by the iorp, not on the. Revision of the occupational pension funds directive. In particular, iorp i stated that pension funds should. Institutions for occupational retirement provision iorp directive 200341ec law details information about directive 200341ec including date of entry into force and links to summary and consolidated version. At an early stage, the proposed directive was referred to as solvency ii for pensions, reflecting its similarity to the insurance directive of the same name.
The iorp directive the directive was published in the official journal on 23 september 2003, with implementation required on 23 september 2005 at the latest. The directive was transposed into the national legislation of the member states in 20052006. In the internal market, institutions for occupational retirement provision iorps should have the possibility to operate in other member states while ensuring a high level of protection and security for members and beneficiaries of occupational pension schemes. In some member states, selfemployed persons cannot join an iorp unless cer tain requirements, including those imposed by social and labour law, are met. The iorp directive revision a truly political debate. The european insurance and occupational pensions authority eiopa was consulted for advice. Revision of the iorp directive on 10 december 2014, the permanent representatives committee agreed, on behalf of the council, its negotiating stance on a draft iorp ii directive. Iorp ii, as it is known, was finalised in january 2017. The iorp ii directive sets common standards ensuring the soundness of occupational pensions and better protects pension scheme members and beneficiaries, by means of among others. Sep 12, 2018 as iorp ii is a directive, it does not have direct effect on schemes but must be implemented into national law by each member state. The eu has recently approved a major revision of the eu legislation on workplace pension schemes the directive on institutions for occupational retirement provision. Directive eu 20162341 of the european parliament and of the. Recent developments after the implementation of the iorp directive article pdf available in pensions an international journal 144 november 2009 with. Written by david eatock 4th edition, in 2014, the european commission proposed a revision iorp ii of the existing institutions for occupational retirement provision iorp directive of.
The key objectives of the revised iorp ii directive are to. One of the latest developments affecting pension schemes operating with the european economic area eea is eu pensions directive iorp ii. The purpose of the 2003 iorp directive was to establish a system of regulation of iorps or occupational pension funds that was common across the european union subsequently adopted by european economic area eea countries of norway, iceland and liechtenstein. The amendments to the existing legislation focus on governance and disclosure. We discussed the directives requirements, its processes, international factors and future implications. In our view, the detail of what is addressed in this assessment should be left to the iorp, subject to high level requirements set out. Our story starts with the 2003 iorp directive, although that was itself many years in the making. Iorp ii directive eiopas iorp stress tests and cbshbs pensionseurope shares the goal of the socalled iorp ii directive to facilitate the development of occupational retirement savings and to provide sustainable and adequate occupational pensions to the european citizens. The authority will provide technical support to the department. The iorp directive was originally issued in june 2003 and was designed to. Iorp ii focuses on the governance of pension schemes and on their communications with individual members.
However, the proposals to revise the iorp directive need to better balance measures that would make a real difference in crossborder provision and those aiming to ensure safety and security. As iorp ii is a directive, it does not have direct effect on schemes but must be implemented into national law by each member state. Lcp guide to the new european pensions directive the iorp ii. An iorp proposing to carry out crossborder activity and to accept sponsorship from a sponsoring undertaking shall be subject to prior authorisation by the relevant competent authority of its home member state.
Institutions for occupational retirement provision. Position paper on proposed revision of iorp directive. In 2014, the european commission proposed a revision iorp ii of the existing institutions for occupational retirement provision iorp directive of 2003, which covers certain occupational pension savings. With the iorp ii directive coming to force starting january 2019, pension firms in europe will have to revamp the it systems and processes that support risk management and governance functions. In 2003, the iorp directive was adopted, establishing the european prudential framework for occupational pension funds, and setting principles designed to secure the retirement income of.
Simply put, an iorp will remain subject to the prudential supervision of the relevant. Directive as last amended by directive 200274ec of the european parliament and of the council oj l 270, 8. Aug 31, 2012 our story starts with the 2003 iorp directive, although that was itself many years in the making. Jun 23, 2014 on 27 march 2014 the eu commission published its proposal for a recast version of the iorp directive 200341ec. An iorp proposing to carry out crossborder activity and to accept sponsorship from a sponsoring undertaking shall be subject to prior authorisation by the relevant competent authority of its home. The latest directive also referred to as iorp ii was nearly three years in the making, with the eu commissions initial proposal for a new directive having been published in march 2014.
However, the proposals to revise the iorp directive need to better balance measures that would make a real difference in crossborder provision and those aiming to. By contrast, what constitutes an iorps home member state is defined in the directive as the member state in which the institution has its registered office and its main administration or, if it does not have a registered office, its main administration. To introduce riskbased supervision for iorps, focus on three main pillars 3. However, the iorp was since been revised in 2016 in response to financial crisis since 2008. An occupational pension fund, also referred to as an employer funded or employer administered scheme, is a pension offered by an employer to an employees retirement scheme. In 2003, the european commission created the international occupational pension funds directive also referred to as the iorp directive to establish the fundamental requirements of offering occupational pension funds and its regulations. If you do not see its contents the file may be temporarily unavailable at the journal website or you do not have a pdf plugin installed and enabled in your browser.
By contrast, what constitutes an iorps home member state is defined in the directive as the member state in which the institution has its registered office and its main administration or, if it does not have. The iorp ii directive will improve the way iorps are governed, make it easier for iorps to conduct crossborder business and provide clearer information to pension scheme members and beneficiaries. To simplify legal, regulatory and administrative requirements for settingup crossborder pension funds 2. Two wellknown reference clients in germany with a pension fund of eur 1 billion total assets have. These rules minimum standards are designed to ensure that occupational pension scheme transactions. The directive should focus on the activities and the risks borne by the iorp, not on the underlying schemes. Over two years after initially being proposed, the new iorps directive 20162341ec iorps ii was adopted by the european parliament on 14 december 2016 and came. With the iorp ii directive coming to force starting january 2019. The uk will still be a member of the eu at this time, and as such has committed to transpose the directive. The pensions authority has published information to give trustees an understanding of the breadth of their responsibilities arising from the provisions of the iorp ii. Over two years after initially being proposed, the new iorps directive 20162341ec iorps ii was adopted by the european parliament on 14 december 2016.
The iorp directive was originally issued in june 2003 and was designed. In our view, the detail of what is addressed in this assessment should be left to the iorp, subject to high level requirements set out in the directive and developed by national competent authorities. Under the current iorp directive a scheme is treated as a crossborder scheme where. Institutions for occupational retirement provision iorp. The iorp ii directive and pensions lexispsl, practical. This practice note looks at the directive on the activities and supervision of institutions for retirement provision iorps. Iorp ii and solvency ii should be extended until the quantitative requirements applicable to iorps have been revised. Comments on the proposed iorp directive insurance europe. It transforms the directive with extensive new requirements on governance and communications. To improve and modernise regulation for iorps that operate dc plans. This article will mainly deal with recent developments during and after the implementation of the iorp directive.
This directive is to be implemented in accordance with those rights and principles. An iorp shall notify its intention to carry out crossborder activity to the competent authority of the home member state. The discussions around iorp ii began in 2011, when the ec issued a call for advice1 on potential changes to the 2003 pensions directive. This agreement enables negotiations with the european parliament.
March 2011, call for advice from the european insurance and occupational pensions authority eiopa sought advice on how to improve. As with the iorp i directive, member states can choose to exempt schemes with less than 100 members from much of its scope, but iorp ii further provides that schemes with more than 15 members must. But it might appear that the directive now holds no interest to the u. The process of revising the iorp directive must be driven by realistic timelines, and truly aim at improving the adequacy and sustainability of occupational. A new european pensions directive the directive came into force on 1 january 2017 formally directive eu 20162341 of the european parliament and of the council of 14. On january 2019 the eu directive 20162341 commonly known as iorp 1 ii comes into effect. On 27 march 2014 the eu commission published its proposal for a recast version of the iorp directive 200341ec. Employers, including smes, are expected to benefit through the reduced cost of joining an existing iorp. The directive harmonises basic prudential rules governing the operation of iorps.
Directive eu 20162341, on the activities and supervision of institutions for occupational retirement provision iorp ii came into force on 12 january 2017 and must be implemented into irish law by january 2019. The eu commission has now proposed that the 2003 iorp directive be revised to address these issues. It lays down minimum standards on funding pension schemes, the types of investments pensions may make and permits crossborder management of pension plans. Directives directive eu 20162341 of the european parliament and of the council of 14 december 2016 on the activities and super vision of institutions for occupational retirement provision iorps recast text with eea relevance the european parliament and the council of the european union. The new eu directive on the activities and supervision of institutions for occupational retirement provision iorp ii was adopted in 2016. Revision to occupational pensions directive iorp ii. Jan 24, 2017 written by david eatock 4th edition, in 2014, the european commission proposed a revision iorp ii of the existing institutions for occupational retirement provision iorp directive of 2003, which covers certain occupational pension savings. European parliaments proposals positive but work still to be done. The extent to which iorp ii will apply to the uk will depend how and when brexit occurs.
Simply put, an iorp will remain subject to the prudential supervision of the relevant authorities of its home member state that is, where the iorp was established, but will also become subject to supervision by the relevant authorities in the host member state or states where it. Institutions for occupational retirement provision directive. The purpose of the 2003 iorp directive was to establish a system of regulation of iorps or. The authority will provide technical support to the department of employment affairs and social protection in transposing the directive into law by the eu deadline of january 2019. The iorp ii directive provides an updated eu legislative framework for workplace pensions. The directive is the result of almost three years of discussion and negotiation. February 2012 confirmed the iorp directive would be revised. Iorp ii is a recast of the directive 200341ec2, commonly known as. The european commission was keen to copy and paste solvency ii for insurance. Member states now have until 12 january 2019 to implement it. The revision of the iorp directive, including the qis, is a deeply political discussion where the voice of social partners, pension funds, and the wider pension industry should be heard. Financial stability, financial services and capital markets union. The directive contributes to iorps role in improving financial stability, as certain iorps are large financial institutions with several millions of members and beneficiaries.
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