The Irish government has completed the transposition of the European Union’s IORP II Directive, over two years later than the January 2019 deadline.
In a statement on the Department of Social Protection’s website, it was revealed that the Minister for Social Protection, Heather Humphreys T.D. has formally signed the European Union (Occupational Pension Schemes) Regulations 2021, which, amongst other things, amends the Pensions Act 1990 [No. 25 of 1990] to transpose requirements of Directive (EU) 2016/2341 [OJ No. L 354, 23.12.2016, p.37] (IORP II Directive) into Irish law.
While many of the provisions of the directive had already been transposed into Irish law, regulations under the European Communities Act 1972 were necessary to transpose requirements of the directive not provided for in Irish law.
Speaking after signing the regulations, Humphreys said: “The IORP II directive is a substantial directive with many of the provisions supporting positive reform of the Irish occupational pension sector.
“The regulations I have signed today will provide for a number of improvements within the area of occupational pensions in Ireland such as – enhanced governance standards for schemes and trust RACs in Ireland - better protections for pension scheme members and beneficiaries - enhanced information provision to scheme members and beneficiaries including the introduction of a Pension Benefit Statement on an annual basis - the removal of obstacles for cross-border provision of services and transfers, and - promotion of long-term investment in growth, environment and employment enhancing economic activities.
“In addition, many of the provisions in the IORP II Directive will support positive reform of the Irish occupational pension sector in keeping with the government’s Roadmap for Pensions Reform.”
The over-arching objective of the IORP II Directive, which is a revision of the original IORP Directive of 2003, is to facilitate the development of occupational retirement savings in the European Union.
However, Irish Association of Pension Funds (IAPF) CEO, Jerry Moriarty, has raised concerns over the additional costs that will be “borne as a result of the new regulations”.
“There is almost a sense of relief that the regulations have finally been signed into law as the delay of over two years in doing so was very frustrating for trustees. While better governance and protection for members is welcome, we are concerned that the additional costs that will be borne as a result of new regulations may result in the wind-up of smaller schemes and ultimately reduce pension coverage. We await guidance from the Pensions Authority on the practical application of the regulations,” he said.
Guidance on the new regulations has been a contentious issue for the Irish pensions industry, with the Pensions Regulator, Brendan Kennedy, previously stating that there would be no guidance available until after the transposition of the directive. Despite this, the Pensions Authority has on several occasions expressed its disappointment at the lack of preparation by many schemes.
The new regulations will apply to all schemes and trust Retirement Annuity Contracts (RACs), including small schemes and one-member arrangements, where possible.
In relation to existing one-member arrangements, post-transposition, IORP II investment and borrowing rules will apply only to new investments or borrowings entered into by such arrangements. A five-year transitional period will also apply to existing one-member arrangements in respect of new IORP II requirements (other than investment and borrowing-related requirements), the government stated.
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