3. 4. 3. Non-listed undertakings include infrastructure projects, unlisted companies seeking growth, real estate or other assets that could be suitable for long term investment purposes. Pan-EU companies can also have a single pension fund for all their European subsidiaries. Having regard to the Treaty on the Functioning of the European Union, and in particular Article 53, Article 62 and Article 114(1) thereof. This Directive lays down rules for the taking-up and pursuit of activities carried out by institutions for occupational retirement provision (IORPs). The competent authorities may prohibit or restrict the activities of an IORP registered or authorised in their territories in particular if: the IORP fails to protect adequately the interests of scheme members and beneficiaries; the IORP no longer fulfils the conditions of operation; the IORP fails seriously in its obligations under the rules to which it is subject; in the case of cross-border activity, the IORP does not respect the requirements of social and labour law of the host Member State relevant to the field of occupational pension schemes. Home Member States may choose to apply the provisions of Articles 9 to 14, Articles 19 to 22, Article 23(1) and (2), and Articles 24 to 58 of this Directive to the occupational retirement provision business of life insurance undertakings in accordance with points (a)(i) to (iii) of Article 2(3) and points (b)(ii) to (iv) of Article 2(3) of Directive 2009/138/EC. Beneficiaries should also be informed of any reduction in the level of benefits due, prior to the application of any such reduction, after a decision which will result in a reduction has been taken. 3. 2. The own-risk assessment shall be taken into account in the strategic decisions of the IORP. The competent authority of the host Member State shall inform the competent authority of the home Member State of any significant change in the host Member State's requirements of social and labour law relevant to the field of occupational pension schemes which may affect the characteristics of the pension scheme insofar as it concerns the cross-border activity, and any significant change in the host Member State's information requirements as referred to in paragraph 7. Institutions such as ‘Unterstützungskassen’ in Germany, where the members have no legal rights to benefits of a certain amount and where their interests are protected by a compulsory statutory insolvency insurance, should be excluded from the scope of the Directive. The calculation of technical provisions shall take place every year. If a cross-border transfer of a pension scheme leads to cross-border activity, the provisions on cross-border activity should then apply. Safekeeping of assets and depositary liability. That function shall be structured in such a way as to facilitate the functioning of a risk-management system for which the IORPs shall adopt strategies, processes and reporting procedures necessary to identify, measure, monitor, manage and report to the administrative, management or supervisory body of the IORP regularly the risks, at an individual and at an aggregated level, to which the IORPs and the pension schemes operated by them are or could be exposed, and their interdependencies. Member States shall also allow undertakings located in their territories to sponsor IORPs which propose to or carry out cross-border activity. On 23 October 2018, the UK Government laid regulations before Parliament which will implement the Directive’s governance and cross-border provisions. As a general principle, IORPs shall, where relevant, have regard to the aim of having an equitable spread of risks and benefits between generations in their activities. 1. National provisions of a prudential nature. An IORP shall notify its intention to carry out cross-border activity to the competent authority of the home Member State. Member States now have until 12 January 2019 to implement it. Where projected levels of retirement benefits are based on economic scenarios, that information should also include an unfavourable scenario, which should be extreme but plausible. 4. The local legislation, known as EbAV II, is set to introduce more reporting and internal risk assessment requirements for pension funds. Where no depositary is appointed, IORPs shall make arrangements to prevent and resolve any conflict of interest in the course of tasks otherwise performed by a depositary and an asset manager. 6. One of the latest developments affecting pension schemes operating with the European Economic Area (EEA) is EU Pensions Directive ("IORP II"). No later than one year before the repayment date, the IORP shall submit to the competent authorities for their approval a plan showing how the available solvency margin will be kept at or brought to the required level at maturity, unless the extent to which the loan may rank as a component of the available solvency margin is gradually reduced during at least the five years before the repayment date. That ratio shall be no less than 50 %. 2. The European Commission is known to have an interest in encouraging cross-border pensions, which was one of the key reasons for the promulgation of the original IORP in 2003. Members and beneficiaries or their representatives shall receive within a reasonable time, any relevant information regarding changes to the pension scheme rules. IORPs should remain fully responsible for discharging all of their obligations under this Directive when they outsource key functions or any other activities. Where, in accordance with the conditions of the pension scheme, members and beneficiaries bear risks, the risk management system shall also consider those risks from the perspective of members and beneficiaries. Subject to Article 2(2), such IORPs shall nevertheless be given the right to apply this Directive on a voluntary basis. Directive 2003/41/EC of the European Parliament and of the Council (3) has been substantially amended several times (4). IORPs which also operate compulsory employment-related pension schemes which are considered to be social security schemes covered by Regulations (EC) No 883/2004 and (EC) No 987/2009 shall be covered by this Directive in respect of their non-compulsory occupational retirement provision business. To that end, IORPs shall employ appropriate and proportionate systems, resources and procedures. Those prudent rates of interest shall be determined by taking into account: the yield on the corresponding assets held by the IORP and the projected future investment returns; the market yields of high-quality bonds, government bonds, European Stability Mechanism bonds, European Investment Bank (EIB) bonds or European Financial Stability Facility bonds, or; the biometric tables used for the calculation of technical provisions shall be based on prudent principles, having regard to the main characteristics of the group of members and the pension schemes, in particular the expected changes in the relevant risks; the method and basis of calculation of technical provisions shall in general remain constant from one financial year to another. 1. Where the retirement benefit is not paid out as a lifetime annuity, members approaching retirement should receive information about the benefit payment products available, in order to facilitate financial planning for retirement. 1. In addition to the tasks referred to in Article 34(1) and (2), the depositary appointed for oversight duties shall: carry out instructions of the IORP, unless they conflict with national law or the IORP's rules; ensure that in transactions involving the assets of an IORP relating to a pension scheme any consideration is remitted to the IORP within the usual time limits; and. Benefits of IORP II. Where the authorisation is refused, the competent authority of the home Member State of the receiving IORP shall provide the reasoning for such refusal within the three month period referred to in paragraph 4. Articles 55 to 58 shall not prevent the authorities or bodies referred to in points (a), (b) and (c) of paragraph 1 of this Article from communicating to the competent authorities such information as the competent authorities may need for the purposes of Article 53. Unless otherwise specified in this Directive, the identification of a particular key function should not prevent an IORP from freely deciding how to organise that key function in practice. 6. Given the specificities of schemes providing a given level of benefits, such benefits are, except under extreme circumstances, not affected by past performance nor by cost structure. Cooperation between Member States, the Commission and EIOPA. The competent authority of the home Member State shall, in coordination with the competent authority of the host Member State, take the necessary measures to ensure that the IORP puts a stop to the detected breach. They shall immediately communicate the text of those measures to the Commission. the loan agreement may be amended only after the competent authorities have declared that they have no objection to the amendment. 1. The imminent introduction of the EU’s IORP II directive in Ireland has been described by the Pensions Authority as the most significant regulatory change in at least a generation. Where an IORP itself provides cover against biometric risks or guarantees either an investment performance or a given level of benefits, Member States shall require that IORP to provide for an effective actuarial function to: coordinate and oversee the calculation of technical provisions; assess the appropriateness of the methodologies and underlying models used in the calculation of technical provisions and the assumptions made for this purpose; assess the sufficiency and quality of the data used in the calculation of technical provisions; compare the assumptions underlying the calculation of the technical provisions with the experience; inform the administrative, management or supervisory body of the IORP of the reliability and adequacy of the calculation of technical provisions; express an opinion on the overall underwriting policy in the event of the IORP having such a policy; express an opinion on the adequacy of insurance arrangements in the event of the IORP having such arrangements; and. IORPs should be allowed to invest in other Member States in accordance with the rules of their home Member States in order to reduce the cost of cross-border activity. In some Member States, supervision can be exercised not only over the IORP itself but also over the entities or companies which are authorised to manage such IORPs. The amount thereof shall reflect the type of risk and the portfolio of assets in respect of the total range of schemes operated. 1. Member States shall ensure the legal protection of persons informing the competent authority in accordance with paragraph 5. The way in which IORPs are organised and regulated varies significantly between Member States. When setting up a pension scheme, employers and employees, or their respective representatives, should consider the possibility of the pension scheme including provisions for the coverage of the longevity risk and occupational disability risks as well as provision for surviving dependants. Repealed Directive with list of its successive amendments, Directive 2003/41/EC of the European Parliament and of the Council, Directive 2009/138/EC of the European Parliament and of the Council, Directive 2010/78/EU of the European Parliament and of the Council, Directive 2011/61/EU of the European Parliament and of the Council, Directive 2013/14/EU of the European Parliament and of the Council, List of time-limits for transposition into national law and application, Article 20(11) third and fourth subparagraphs, Use quotation marks to search for an "exact phrase". However, in home Member States where there is no provision for declarations on oath to be made the nationals of other Member States concerned shall be allowed to produce a solemn declaration made by him or her before a competent judicial or administrative authority in the home Member State or the Member State of which they are a national or before a notary in one of those Member States. The application for authorisation of the transfer shall be submitted by the receiving IORP. If this condition is not met, the competent authority of the home Member State shall promptly intervene and require the IORP to immediately draw up appropriate measures and implement them without delay in a way that members and beneficiaries are adequately protected. and which carries out activities directly arising therefrom; ‘pension scheme’ means a contract, an agreement, a trust deed or rules stipulating which retirement benefits are granted and under which conditions; ‘sponsoring undertaking’ means any undertaking or other body, regardless of whether it includes or consists of one or more legal or natural persons, which acts as an employer or in a self-employed capacity or any combination thereof and which offers a pension scheme or pays contributions to an IORP; ‘retirement benefits’ means benefits paid by reference to reaching, or the expectation of reaching, retirement or, where they are supplementary to those benefits and provided on an ancillary basis, in the form of payments on death, disability, or cessation of employment or in the form of support payments or services in case of sickness, indigence or death. They are a vital part of the Union economy, holding assets worth EUR 2,5 trillion on behalf of around 75 million members and beneficiaries. 3. Before the IORP starts to carry out a cross-border activity, the competent authority of the host Member State shall, within six weeks of receiving the information referred to in paragraph 3, inform the competent authority of the home Member State, of the requirements of social and labour law relevant to the field of occupational pension schemes under which the pension scheme sponsored by an undertaking in the host Member State must be operated and of the information requirements of the host Member State referred to in Title IV which shall apply to the cross-border activity. 3. Optional application to institutions covered by Directive 2009/138/EC. In order to facilitate financial security in retirement, these benefits may take the form of payments for life, payments made for a temporary period, a lump sum, or any combination thereof; ‘member’ means a person, other than a beneficiary or a prospective member, whose past or current occupational activities entitle or will entitle him/her to retirement benefits in accordance with the provisions of a pension scheme; ‘beneficiary’ means a person receiving retirement benefits; ‘prospective member’ means a person who is eligible to join a pension scheme; ‘competent authority’ means a national authority designated to carry out the duties provided for in this Directive; ‘biometric risks’ mean risks linked to death, disability and longevity; ‘home Member State’ means the Member State in which the IORP has been registered or authorised and in which its main administration is located in accordance with Article 9; ‘host Member State’ means the Member State whose social and labour law relevant to the field of occupational pension schemes is applicable to the relationship between the sponsoring undertaking and members or beneficiaries; ‘transferring IORP’ means an IORP transferring all or a part of a pension scheme's liabilities, technical provisions, and other obligations and rights, as well as corresponding assets or cash equivalent thereof, to an IORP registered or authorised in another Member State; ‘receiving IORP’ means an IORP receiving all or a part of a pension scheme's liabilities, technical provisions, and other obligations and rights, as well as corresponding assets or cash equivalent thereof, from an IORP registered or authorised in another Member State; ‘regulated market’ means a regulated market as defined in point (21) of Article 4(1) of Directive 2014/65/EU; ‘multilateral trading facility’ or ‘MTF’ means a multilateral trading facility or MTF as defined in point (22) of Article 4(1) of Directive 2014/65/EU; ‘organised trading facility’ or ‘OTF’ means an organised trading facility or OTF as defined in point (23) of Article 4(1) of Directive 2014/65/EU; ‘durable medium’ means an instrument which enables a member or a beneficiary to store information addressed personally to that member or beneficiary in a way that is accessible for future reference and for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored; ‘key function’, within a system of governance, means a capacity to undertake practical tasks comprising the risk management function, the internal audit function, and the actuarial function; ‘cross-border activity’ means operating a pension scheme where the relationship between the sponsoring undertaking, and the members and beneficiaries concerned, is governed by the social and labour law relevant to the field of occupational pension schemes of a Member State other than the home Member State. For supplementary insurances referred to in point (a)(iii) of Article 2(3) of Directive 2009/138/EC, the required solvency margin shall be equal to the required solvency margin for IORPs as laid down in Article 18. That non-communication of information shall be subject to a right of appeal to the courts in the home Member State. IORP II directive in Ireland. This Directive is without prejudice to the role of social partners in the management of IORPs. This Directive respects the fundamental rights and observes the principles recognised by the Charter of Fundamental Rights of the European Union, in particular the right to the protection of personal data, the freedom to conduct a business, the right to property, the right of collective bargaining and action and the right to a high level of consumer protection, in particular by ensuring a higher level of transparency of retirement provisioning, informed personal financial and retirement planning as well as facilitating the cross-border activity of IORPs and the cross-border transfer of pension schemes. As with much of the recent financial sector legislation to emerge from the financial crisis of 2008, the Directive aims to improve governance and accountability in relation to workplace pensions. That risk assessment should also be made available to the competent authorities and should, where relevant, include, inter alia, risks related to climate change, use of resources, the environment, social risks, and risks related to the depreciation of assets due to regulatory change (‘stranded assets’). IORPs carrying out cross-border activity shall be subject to the information requirements referred to in Title IV imposed by the host Member State in respect of the prospective members, members and beneficiaries which that cross-border activity concerns. Since the objective of this Directive, namely to create a Union legal framework covering IORPs, cannot be sufficiently achieved by the Member States, but can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. The home Member State may allow an IORP, for a limited period of time, to have insufficient assets to cover the technical provisions. (13)  Directive 2013/36/EU of European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338). Member States shall ensure that the costs of the transfer are not incurred by the remaining members and beneficiaries of the transferring IORP or by the incumbent members and beneficiaries of the receiving IORP. in Article 308b, paragraph 15 is replaced by the following: ‘15. the assets to be transferred are sufficient and appropriate to cover the liabilities, technical provisions and other obligations and rights to be transferred, in accordance with applicable rules in the home Member State of the receiving IORP. ‘institution for occupational retirement provision’, or ‘IORP’, means an institution, irrespective of its legal form, operating on a funded basis, established separately from any sponsoring undertaking or trade for the purpose of providing retirement benefits in the context of an occupational activity on the basis of an agreement or a contract agreed: individually or collectively between the employer(s) and the employee(s) or their respective representatives, or. Member States shall ensure that there is a legal separation between a sponsoring undertaking and an IORP registered or authorised in their territories in order that the assets of the IORP are safeguarded in the interests of members and beneficiaries in the event of bankruptcy of the sponsoring undertaking. Appropriate regulation and supervision at Union and national level remain important for the development of safe and secure occupational retirement provision across all Member States. Member States shall ensure, in an appropriate manner, the uniform application of this Directive through regular exchanges of information and experience with a view to developing best practices in this sphere and closer cooperation with the involvement of the social partners where applicable, and by so doing, preventing distortions of competition and creating the conditions required for unproblematic cross-border membership. The Department for Work and Pensions (DWP) also made changes to the rules for cross-border schemes in accordance with IORP II. In those circumstances, the IORP concerned should hold own funds based on the value of technical provisions and risk capital. The review shall comprise the following elements: an assessment of the qualitative requirements relating to the system of governance; an assessment of the risks the IORP faces; an assessment of the ability of the IORP to assess and manage those risks. 2. Their social function and the triangular relationship between the employee, the employer and the IORP should be adequately acknowledged and supported as guiding principles of this Directive. Member States may decide not to apply the requirements referred to in points (f) and (g) to investment in government bonds. The impact of IORP II on Dutch pension funds is expected to be small. Member States should be able to allow the IORP to carry out key functions through the same single person or organisational unit as the sponsoring undertaking, provided that the IORP explains how it prevents or manages any conflict of interest with the sponsoring undertaking. Member States shall ensure that IORPs take reasonable steps to ensure continuity and regularity in the performance of their activities, including the development of contingency plans. An internal market for IORPs requires mutual recognition of prudential standards. Member States may, taking into account the size, nature, scale and complexity of the activities of the IORP, allow the IORP to carry out key functions through the same single person or organisational unit as in the sponsoring undertaking, provided that the IORP explains how it prevents or manages any conflicts of interest with the sponsoring undertaking. By derogation from paragraph 1, where a pension scheme is being wound up, Member States may allow confidential information to be divulged in civil or commercial proceedings. Member States shall not restrict IORPs from appointing, for the management of the investment portfolio, investment managers established in another Member State and duly authorised for this activity, in accordance with Directives 2009/65/EC, 2009/138/EC, 2011/61/EU, 2013/36/EU and 2014/65/EU, as well as the authorised entities referred to in Article 2(1) of this Directive. 2. A prime example is AI Pension, the SEK7.9bn (€756m) industry scheme for architects and engineers. 3. Where the transfer results in a cross-border activity, the competent authority of the home Member State of the transferring IORP shall also inform the competent authority of the home Member State of the receiving IORP of the requirements of social and labour law relevant to the field of occupational pension schemes under which the pension scheme must be operated and of the information requirements of the host Member State referred to in Title IV which shall apply to the cross-border activity. 2. In that case, Member States shall communicate to the Commission the relevant criminal law provisions. The home Member State shall ensure that either the competent authorities, or the authorities responsible for supervision of life insurance undertakings covered by Directive 2009/138/EC, as part of their supervisory work, verify the strict separation of the relevant occupational retirement provision business. IORPs are very long-term investors. This would potentially lead to significant economies of scale for such IORPs, improve the competitiveness of Union industry and facilitate labour mobility. Cross-border activity and the cross-border transfer of pension schemes are distinct and should be governed by different provisions. (12)  Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1). Financial institutions which already benefit from a Union legislative framework should in general be excluded from the scope of this Directive. For the purposes of point (a), subordinated loan capital shall also fulfil the following conditions: only fully paid-up funds shall be taken into account; for loans with a fixed maturity, the original maturity shall be at least five years. Legal separation between sponsoring undertakings and IORPs.
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