The European Parliament, the Council and the Commission have agreed on a proposal for a revised IORP II Directive (the "Directive"). This was the culmination of six months of negotiations and was agreed in June 2016. Changes negotiated for the revised text include:
- Permitting Member States to allow an IORP to be underfunded for a limited period of time (but subject to certain requirements such as a recovery plan being put in place for the IORP). The Directive will also require regulatory authorities to intervene to require the IORP to implement appropriate measurement without delay in a way that members and beneficiaries are adequately protected.
- Simplified requirements for a 'Pension Benefit Statement'.
- A responsibility to be placed on IORPs to consider environmental, social and governance factors and investment risks relating to climate change, use of resources and the environment as part of a risk assessment.
- Easing of the manner of establishment of cross-border funds and transferring of assets from one Member State to another including the introduction of an option of mediation (facilitated by EIOPA) where there is disagreement between authorities.
- The introduction of the requirement of collective qualifications, knowledge and experience for persons who effectively run an IORP and those with key functions in relation to the IORP (such as trustees).
- The introduction of the use of administration sanctions for prudential supervision under the Directive.
- Introducing a general principle of an equitable spread of risks and benefits between generations in the activities of an IORP.
The text, while agreed, is not finalised and has yet to be formally approved by the European Parliament. It is expected the Parliament will review the text between now and year end. Thereafter it will be published in the Official Journal and will officially enter into force. Member States will have 24 months to transpose the text into their national legislation. The Department of Finance and the Department of Social Protection are likely to be tasked with its transposition.