Navigation path

Left navigation

Additional tools

Other available languages: FR DE

European Commission - Press release

Commission welcomes deal to improve rules for occupational pensions

Brussels, 30 June 2016

The EU has today agreed new rules for work pension funds to improve the way they are governed and enhance the clarity of information provided to pension savers.

The European Parliament, the Council and the Commission have agreed on a proposal for a revisedDirective on occupational pension funds, known as IORP2. This has been formally approved by the Permanent Representatives Committee (COREPER) of the Council today. 

The new Directive will improve the way pension funds are governed, make it easier for pension funds to conduct cross-border business and provide clear information to pension scheme members and beneficiaries. These rules will make it easier for pension funds to invest in long-term assets, strengthening the role they can play in the Capital Markets Union.

"Pension funds have a special responsibility in helping people save and plan for their retirement," said Jonathan Hill, European Commissioner for Financial Stability, Financial Services and Capital Markets Union. "This agreement will ensure high standards of governance, improve information for pension savers, and encourage more cross-border pension services. I would like to congratulate the Dutch Presidency and MEP Brian Hayes for this work in delivering a sensible, proportionate package of measures. This marks the end of the work we plan to do on pension funds."

The revised Directive, based on a proposal adopted by the Commission in 2014, strengthens and replaces the existing 2003 IORP Directive. It does not include any harmonised solvency rules for occupational pension funds.

Following today's approval by the Council, the text will have to be formally approved by the European Parliament. After that, 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.

Background

The 2003 Directive on the activities and supervision of institutions for occupational retirement provision (IORPs) provided a EU legislative framework for workplace pensions with a specific cross-border dimension to allow for the setting up of pan-European pension funds that manage the pension schemes of employees in different member states.

The 2014 IORP2 proposal was adopted by the Commission in order to revise the rules for occupational pension funds to improve their governance, increase the transparency of information provided to members and beneficiaries, encourage more cross-border activity and at the same time support the further development of pension funds as an important type of long-term investor in the EU.

Under the new Directive, workplace pension funds and their members and beneficiaries will benefit from the following:

- Enhanced cross-border rules: the Directive will introduce a new procedure for the cross-border transfer of pension scheme portfolios with a role given to both countries' supervisory authorities based on a list of criteria. Non-binding EIOPA mediation is possible in case these authorities disagree.

- The principal rule that cross-border IORPs should be fully funded at all times will continue to apply. However, the Directive acknowledges the possibility of cross-border IORPs to be underfunded, in which case the supervisor must promptly intervene and require the pension fund to develop and implement measures without delay to protect members and beneficiaries;

- Improved governance: the key functions of pension funds such as the risk-management function, the internal audit function and the actuarial function (for DB schemes) must be experienced persons and carry out their duties in an objective, fair and independent way. IORPs must, furthermore, identify the risks they are or could be exposed to in the short and in the long term which may have an impact on their ability to meet their obligations and they must draw up an own risk assessment accordingly.  

- Provision of better and more comprehensible information to pension scheme members through the annual Pension Benefit Statement (PBS). This document will set out information on the guarantees under the pension scheme, on the pension benefit projections, information on the accrued entitlements, the contributions paid and the costs deducted, as well as information on the funding level of the pension scheme. The PBS is designed to allow pension scheme members to take more informed decisions about their pensions while leaving Member States the flexibility to tailor its exact content and design to their market.

- Responsible investments: as a result of the agreement, pension funds will have to consider the risk of environmental, social and governance risks in their investment decisions and document this in their three-yearly statement of investment policy principles.  

The agreed rules cater for pension funds of all sizes and structures across the EU: IORPs with less than 100 members will have to meet basic governance requirements and ensuring the safekeeping of assets, while very small IORPs with less than 15 members will have to comply with even less.

For more information

See DG FISMA's page on IORPs

IP/16/2364

Press contacts:

General public inquiries: Europe Direct by phone 00 800 67 89 10 11 or by email


Side Bar