1.2 Proposal for the IORP II Directive


aba priorities for the IORP II Trilogue

The aba has published its position regarding the report of the ECON Committee relating to the IORP II Directive proposal (a German version is also available). From our perspective, the Commission Proposal from 2014 has overall been improved by the amendments proposed by the Council and the European Parliament. For the aba, the most important points to be considered in the Trilogue are:

  • Maintain the current rules for the calculation of the technical provisions (Art. 14.4)
  • Risk evaluation for pensions (Council) rather than HBS with EIOPA (ECON Committee) (Art. 29)
  • Adequate rules for transfers of pension schemes (Art. 13 / Art. 3a)
  • Carrying out key functions both in the sponsoring undertaking and in the IORP should be unproblematic.
  • Clarification for Art. 24 needed: those working for the IORP who are paid by the sponsoring undertaking are subject to the remuneration policy of the sponsoring employer and do not fall under Art. 24 IORP II.
  • Deletion of all ECON additions regarding “intergenerational balance”, because this cannot be achieved through supervisory law (Art. 20.1 / Art. 29.4 / Art. 60ha).

The Trilogue began on 29 February 2016, with 07 June being the indicative plenary sitting date for the Parliament.


aba position taking into account the Council Agreement from 10 December 2014

The aba has published a position paper on the IORP II Directive proposal, taking into account the Council Agreement from 10 December 2014, which has been distributed to German Members of the European Parliament. The main points are:

  • European supervision of IORPs should set minimum standards, always respecting the provisions stipulated by national social and labour law.
  • The IORP II Directive needs to acknowledge the special character of IORPs and in particular the triangular relationship between the employee, the employer and the IORP. The definition of IORPs as well as the main objective of IORP supervision have to be chosen accordingly and need to adequately recognise the social purpose of occupational pensions.
  • IORPs do not need solvency capital requirements inspired by Solvency II. The requirements regarding the risk evaluation for pensions as stipulated in the agreed Council Compromise (Art. 29) are more than sufficient.
  • The review of the European System of Financial Supervision still needs to address the key questions for occupational pensions in relation to the European Supervisory Authority EIOPA. The provisions of national social and labour law fall firmly and exclusively within the remit of the Member States, they cannot be altered by EU supervisory law.
  • The amendments made to the governance requirements as set out in the text proposed by the EU Commission were technically sound and from the perspective of IORPs practicable improvements. The implementation of the proposals in the agreed Council Compromise would nevertheless lead to significant additional costs for IORPs.
  • The pension information requirements have to create a real added value for members and beneficiaries. The related costs have to be proportional to this added value.
  • The proposal for an IORP II Directive is a step in the right direction regarding the cross-border activities of IORPs. The objective should be to develop a working mechanism for cross-border transfers of pension schemes (Art. 13). There should be no obstacles for multinationals who want to continue the occupational pension in the current IORP for individual workers posted or delegated into a different Member State.
  • IORPs should continue to be able to insure their risks (longevity, invalidity, survivors‘ pensions) via a reinsurance contract.


IORP II: Draft opinion by Jeroen Lenaers (EMPL) published

The Draft Opinion by EMPL Rapporteur Jeroen Lenaers from 13 February 2015 has been published and is currently debated in the EMPL Committee.

From the perspective of the aba, the EMPL Draft Opinion is positive, because several aba proposals have been taken up in the text: e.g. the social purpose of IORPs is acknowledged; the delegated acts from the Commission proposal have been deleted; IORPs which are active across borders do not need to be fully funded at all times and the EU requirements for the pension benefit statement now leave more flexibility to the Member States.


IORP II Directive: General Approach agreed by the Council

After the Italian presidency published the first council compromise on 17 September 2014, the Council agreed on the revised fourth compromise on 10 December 2014 (IORP II Directive Proposal – 28 November 2014). The General Approach of the Council means that negotiations can start with the European Parliament – the aim is to adopt the Directive in the first reading.

Within the European Parliament, which is expected to work on this Directive during 2015, the Economic and Monetary Affairs Committee (ECON) is responsible. It is expected that the Committees for Employment and Social Affairs (EMPL) as well as for Women’s Rights and Gender Equality (FEMM) will also produce opinions on the Directive. The Rapporteur for the Directive is the Irish MEP Brian Hayes (EPP; ECON).

The press release of the Council as well as an overview of the legislative procedure can be downloaded from the websites of the Council and the European Parliament.


PensionsEurope publishes position paper regarding IORP II Directive Proposal

PensionsEurope has published a detailed Position Paper on the Commission proposal for an IORP II Directive. PensionsEurope criticises that the social character of occupational pensions is not sufficiently taken into account, and that the Proposal is strongly geared towards defined contribution schemes, which for example in Germany do not exist.

The main area of criticism are the three delegated acts (regarding remuneration, risk evaluation for pensions and the pension benefit statement). PensionsEurope calls for the deletion of all three delegated acts to give Member States more leeway to implement the future Directive in a way which would strengthen their national occupational pension system.


Italian presidency published first compromise text

The Italian presidency has published a recast of the Commission’s IORP II Proposal as a first proposal for a Council compromise text on 17 September 2014. The main change relates to the three delegated acts: for remuneration and the risk evaluation for pensions, the compromise text calls on EIOPA to develop guidelines; a reduced delegated act is still envisaged for the pension benefit statement. However, in contrast to the previous Commission proposal it now mainly concerns the form and the structure of the benefit statement.

Further changes have been made i.a. in Articles 28 (actuarial function), 47 (identification of the institution and of the pension scheme), 59 (main objective of prudential supervision) and 64 (information to be provided to the competent authorities). A new Article (26a) regarding the internal control function has been added.

The Italian compromise text was discussed in the council working group meeting on 23 September 2014. The next and potentially final council working group meeting is planned for 29 October 2014. The Italian presidency is aiming to present the proposal at the ECOFIN Council on the 8 and 9 December 2014 – a plan which seems ambitious but not impossible.


aba assessment of the Commission’s IORP II Directive Proposal

The aba has published an aba assessment of the Commission’s IORP II Proposal in September 2014. After a general assessment of the main points, the aba comments in detail on the proposed requirements. The aba is very much in favour of the overarching objective of the review of the Directive to increase coverage of occupational pensions across the EU. However, in their assessment the aba doubts that the current Proposal would actually contribute to an increase in coverage. To the contrary, the Proposal gives rise to fears that the opposite could happen.

The aba argues that IORPs need a lasting Directive and no solvency requirements following the insurance Directive Solvency II. The main objective of IORP supervision needs to fit occupational pensions – not the Solvency II Directive. That means, that the IORP II Directive needs to acknowledge the special character of IORPs and in particular the triangular relationship between the employee, the employer and the IORP.

The new Directive should above all take the importance of national social and labour law into account: Considering the diversity of occupational pensions across the EU and the central role national social and labour law plays in shaping occupational pensions, the new Directive should leave more flexibility to the Member States, rather than imposing delegated acts. For the minimum requirements in the areas of governance and risk management, the Directive should focus on a practical risk evaluation for pensions. Information requirements need to truly add value for the members and beneficiaries, and which is proportionate to the costs they bring. Overall, the review of the IORP Directive should adequately take into account the special characteristics of occupational pensions.

Together with the assessment in English, the aba has published the position paper in German as well as a commentary on the Commission’s Impact Assessment and an estimation of the approximate costs of the proposals for German IORPs (the paper is in German with an executive summary in English).


PensionsEurope publishes statement on the IORP II proposal

On 20 May 2014 PensionsEurope has put out a statement regarding the IOPR II proposal.

PensionsEurope welcomed that the proposal does not contain any reference to Solvency-II-style capital requirements. Workplace pensions are based on social and cultural traditions and strongly linked to statutory public (first pillar) pension provision, which differ between Member States. For this reason, PensionsEurope does not believe that quantitative requirements can be harmonised in an appropriate way and, more generally, argues that IORPs cannot be regulated in the same way as banks and insurance companies.

The paper discusses the general approach of the proposal and sketches out the most expensive (and sometimes unnecessary) extra burdens for schemes in the areas of governance and risk management as well as information requirements. A more detailed analysis is expected in the summer of 2014.  


EU Commission publishes IORP II proposal

The European Commission published the long-awaited proposal for an IORP II Directive as well as a Communication on long-term financing of the European economy on 27 March 2014.

As expected, Commissioner Barnier (Internal Market and Services) named the need for reforms following the financial crisis, the growing number of defined contribution plans as well as an increased need for retirement provision because of ageing populations as the main reasons for the review of the Directive from 2003. He also stressed the need for long-term financing to strengthen the European economy. Comparing the proposal to the Directive from 2003, the main changes are, again as expected, in the areas of governance and transparency. Barnier also emphasises the importance of cross-border activities of IORPs and introduced a new rule to smoothen the transfer of pension schemes from one IORP to another located in a different Member State.

The proposal for an IORP II Directive, the press release, FAQs, attachments and importantly the short and long version of the impact assessment are available on the Commission’s website.

PensionsEurope has published a press release commenting on the proposal.






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