As you will be aware last Sunday, January 13th, was the deadline for transposition of the IORP II Directive into Irish law. It had been expected that this would take place through the adoption of regulations which would be published on Friday last. Having checked the position with the Department of Employment Affairs and Social Protection yesterday, we were advised as per the text below. We will continue to monitor this and update you as appropriate:

The over-arching objective of IORP II Directive is to facilitate the development of occupational retirement savings in the EU.   Many of the provisions contained within the Directive will support positive reform of the Irish occupational pension sector.  The implementation of the Directive will greatly enhance scheme governance and the consumer protection of pensioners, members and future members. 

The Directive provides for a range of new requirements concerning governance, management standards in schemes, safekeeping of assets, the need for clear and relevant information to members, the removal of obstacles to cross-border provision of pension services and the facilitation of cross border transfer of schemes.  There are also provisions that will enhance the powers of Pensions Authority for effective supervision of occupational pensions.  Transposition of the Directive is also a key part of the Government’s Roadmap for Pensions Reform 2018-2023.

While the Directive allows Member States the discretion not to apply some of the provisions to smaller schemes, the general principle being followed in the transposition into Irish law is that all schemes should be subject to sound protections for pensions and consumers.  Money saved for pension purposes should be properly protected to ensure that the saver has adequate resources for retirement years.  To exclude small schemes from the provisions of the Directive would be contrary to the policy of enhancing standards for consumers. 

The application of the Directive is prospective, not retrospective so these changes will not affect existing investments and borrowings by schemes.  From transposition forward, single member schemes will no longer be allowed to enter into new borrowing agreements, except for short term and liquidity purposes, and all future investments will have to be in accordance with the rules in the Directive. 

Officials in this Department, supported by the Pensions Authority, are managing the transposition process of the IORP II Directive.  Regulations to transpose the Directive are being drafted and are at an advanced stage.  The deadline for transposition is 13th January 2019 and the Department is working towards transposition into Irish law later this quarter.

Codes of practice will also be issued by the Pensions Authority following approval of the Minister.  The codes will expand on requirements, policies and principles prescribed in the transposing regulations. They will explain in practical detail what the Authority will expect from trustees to demonstrate their commitment to serving the best interests of members, deferred members and other beneficiaries. 

To ensure that schemes are informed of their obligations under the Directive, the Pensions Authority will also undertake a communication campaign on the implementation of the Directive.  The Authority will engage and consult with industry stakeholders and trustees on the new regulatory regime and related codes of practice.  The emphasis of this engagement will be on providing sufficient support, time and information in order for industry and trustees to plan for and make the changes needed.