Recent changes to the draft IOPR Directive will be of interest to all cross-border employers. On 17 September 2014, a revised version of the proposed IORP II Directive was published by the Italian Presidency of the Council of Ministers following ongoing negotiations over its contents. The so-called compromise text makes detailed and extensive technical changes to the provisions in the original draft in relation to cross-border requirements, dealing with governance standards and disclosure of information.

Most notably, the compromise text removes the current requirement in the IORP Directive that pension schemes operating cross-border must be fully funded "at all times", though such a scheme must still be fully funded at the start of its cross-border operations. If an IORP ceases to be fully funded, it must prepare a recovery plan and submit this to the relevant supervisory authority.

The highly prescriptive measures in the original draft proposal regarding the planned pension benefit statement that IORPs will have to provide to members have been modified to an extent. In particular, the requirement that the statement should be no longer than two sides of A4 paper when printed has been replaced by an obligation that it must be “written in a concise way”.

A minor change has been made to the proposed rule that individuals running an IORP must satisfy a “fit and proper person” test, though its effect is unclear and it does not help clarify the impact of this provision on the position of lay trustees in the UK. Neither is it clear whether the knowledge and experience requirements apply to each individual trustee or to the trustee body as a whole.

The European Commission's original plan to ensure the recast IORP II is transposed into member states' national law by 31 December 2016 seems to have been abandoned, with no substitute timetable yet proposed.


The removal of the requirement for cross-border schemes to be fully funded “at all times” is significant and may encourage greater pension provision under cross-border schemes in future. However, it is unfortunate that the minor changes to the “fit and proper person” test for trustees still appear to make the requirements incompatible with having member-nominated trustees (or directors).

As for the amended disclosure obligations, current provision under the relevant UK regulations would need to be compared to the finalised IORP requirements to confirm whether changes to the relevant legislation would be required in future.