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The European Commission adopts legislative proposals for changes to the IORP Directive

On 27 March, the European Commission adopted legislative proposals for changes to the IORP Directive. These measures will have significant implications for the governance and investments of occupational pension schemes across Europe if enacted in accordance with the draft. The most controversial part of regulation of IORPs, the question of solvency requirements (Pillar I), is excluded. The changes focus on Pillars II and III, addressing governance and reporting.

European CommisionSome of the main changes include:

  • "Fit and proper" requirements on the management and boards of pension funds
  • Requirements for internal audit functions and remuneration policies
  • Requirements on the documentation of the risk management of funds, including an annual "Risk Evaluation for Pensions" report or "REP"
  • Introduction of a standard pension benefit statement

Reported as a late change to the draft, the Commission retained the requirement for cross-border funds to be "fully funded at all times", widely viewed as a barrier to the success of these funds. This is contrary to one of the main aims of the new Directive to remove obstacles to cross-border pensions.

The press release can be accessed here.

The draft directive can be accessed here.

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