Review of the IORP II Directive: embracing the future while protecting the legacy

The European Insurance and Occupational Pensions Authority (EIOPA) submitted today to the European Commission its technical advice on the review of the IORP II Directive, which regulates the activities and supervision of institutions for occupational retirement provision (IORPs).

EIOPA provides its technical advice with the objective of ensuring that the reviewed directive can embrace the future while protecting the legacy. In particular, EIOPA’s technical advice:

• proposes changes to keep the regulatory framework for IORPs relevant bearing in mind the ongoing shift from defined benefit (DB) to defined contribution (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;
• 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;
• proposes ways to enhance the proportionality measures of the existing regulation and to reflect it in new standards.

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.

Related documents

• EIOPA’s Technical advice on the review of the IORP II Directive
• Video interview with Justin Wray, Head of the Policy, EIOPA
• Factsheet: summary of the technical advice
• Factsheet: overview of occupational pensions sector in Europe