The European Insurance and Occupational Pensions Authority (EIOPA) has submitted its technical advice on the review of the IORP II Directive to the European Commission (EC).

EIOPA’s advice on the directive covers a range of topics, with its aim to ensure the “directive can embrace the future while protecting the legacy” of IORPs.

The authority was tasked to provide advice on several areas, such as the adequacy of the directive from a prudential and governance point of view and its impact on the stability of different types of IORPs; cross-border activity and transfers; the functioning of the Pension Benefit Statement; the need for and possible ways to adapt the regulatory framework to the shift from DB to DC schemes; the sustainability aspects of the fiduciary duties and stewardship rules of IORPs; and, prudential requirements to include diversity and inclusion issues in relation to management bodies.

It has proposed changes to the directive that keep the regulatory framework for IORPs relevant, bearing in mind the ongoing shift from DB to DC pensions, and in relation to the environmental and socio-economic challenges facing society. Specific proposals are made on transparency of costs and charges and reflecting sustainability in investment decisions.

The authority also recognises the need for existing DB IORPS to be properly regulated and supervised, including the appropriate monitoring of solvency risks and the sound management of liquidity risks, particularly in light of events in the UK in 2022. It has also proposed ways to enhance the proportionality measures of the existing regulation and to reflect it in new standards.

Commenting, EIOPA chair, Petra Hielkema, said: “IORPs play an essential role in providing EU citizens with adequate pensions and are an important source of capital for the European economy to finance inclusive and sustainable growth. The pensions sector in Europe is experiencing profound changes. We need to embrace the future while protecting the legacy.

“More and more IORPs are offering DC schemes and an increasing number of multi-sponsor IORPs are being set up by commercial service providers. At the same time, challenges such as an ageing population, widening pension gaps especially for women, and climate change are directly affecting occupational pensions. It is therefore important that the IORPII Directive recognizes and reflects these changes”.

This advice builds on previous decisions, opinions and reports that EIOPA has issued and takes stock of the results of a comprehensive survey among national supervisors and of the feedback received during the public consultation.
EIOPA’s technical advice is given in response to a call for advice from the European Commission. EIOPA has met its brief just a few days ahead of schedule with the deadline for its final advice being 1 October 2023.

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