PensionsEurope is advocating for a cost assessment to be undertaken in relation to the impact of the IORP II Directive before the European Commission (EC) reviews the regulation.

The call was made in its updated position paper on the IORP II review, following the European Insurance and Occupational Pensions Authority’s (EIOPA) technical advice to the EC on the directive in September 2023. Its advice on the directive covers a range of topics, aiming to ensure the “directive can embrace the future while protecting the legacy” of IORPs.

The EC will evaluate this advice and it is expected to start working on the file and present its proposal during the next legislative mandate.

In its position paper, PensionsEurope sets out its response to the key recommendations made by EIOPA, covering areas such as governance and prudential standards, cross-border activities and transfers, Information to members and beneficiaries and other business conduct requirements, the shift from DB to DC, sustainability and diversity and inclusion.

Overarching all of this was its recommendation for the cost assessment as the implementation of the IORP II Directive had a “huge cost increase”, especially for small and midsized IORPs.

“Therefore, due consideration should be given to the cost increase of the proposed changes to IORP II, not only for each change but also on an aggregate basis of all proposed changes. For this reason, before the upcoming review, we believe that a proper cost assessment as part of the impact analysis needs to be conducted in order to avoid a disproportionate cost increase falling on all and especially smaller IORPs,” the association stated.

In addition, PensionsEurope stressed that the minimum harmonisation aspect of the legislation must continue.

“To be highly compliant with the principles of subsidiarity and proportionality, there should continue to be no provisions for delegated acts. The IORP landscape across Europe is very diverse, not just between countries but also within them. This diversity is largely derived from and intricately linked to national labour law, tax law and social requirements as well as individual countries’ social security systems.

“Because occupational pension systems, of which IORPs are a part and their integration with state pension provision, differ greatly from one country to the next, so do their functions and organisational structures. Due to the occupational nature of IORPs, national social and labour laws and national social partners at the company, industry, and higher levels have set up very different IORP types and IORP activities across Europe. This diversity must be fully respected by European IORP legislation, and it is imperative that none of these national occupational pension systems may be harmed,” it stated.

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