Institutions for Occupational Retirement Provision (IORP II) Directive
The revised IORP Directive entered the Official Journal of the European Union on 14 December 2016 and member states were required to transpose it into national law by 13 January 2019.
While the IORP II directive has come into effect since January , Ireland has failed to meet the legislative deadline for transposing the directive into Irish law. The indication from the Department of Employment Affairs and Social Protection is that the requirement will be met by the end of Q1 2019.
This failure to enact legislation for the implementation of the directive, resulting in a lack of clear guidance from the government, has contributed to the uncertainty around its impact on corporate pension schemes.
While we await the legislation in Ireland employers and trustees need to ensure compliance with the increased responsibilities laid out in the directive. Employers should be aware that the qualifications and expertise of the trustee board will be under greater scrutiny, with trustees required to meet the fit and proper standards.
Another important development from the directive is that trustees will be required to disclose how they consider the Environmental, Social and Governance (ESG) factors in their investment decision-making process.
Trustees will need to outline how the investment policy takes account of the ESG factors, including their relevance on investment selection, the overall governance framework and the risk management of the scheme.