Out-Law News | 04 Jul 2016 | 8:13 am | 1 min. read
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The new legislation has still to be formally approved by the European Parliament, and once it is finalised member states will have 24 months to implement the new measures, said pensions expert Simon Tyler of Pinsent Masons, the law firm behind Out-Law.com.
"We don't yet know exactly when the UK will leave the EU, so UK pension scheme trustees should hold off rushing to implement the measures. Brexit could well see off the need for the UK to implement them," he said.
The new rules aim to make cross-border transactions and long-term investment easier for funds, and ensure clear information for scheme members and beneficiaries, the European Commission said.
The original IORP directive, which dates back to 2003, set out basic requirements for occupational funds and their supervision, including a requirement for funds to invest their assets prudently and in the best interest of members and beneficiaries. The changes are based around the need for strengthened governance in light of the decline of defined benefit (DB) schemes, which guarantee the benefits paid out on retirement, in favour of defined contribution (DC) schemes, where the investment risk is borne by the pension scheme member. They are also designed to encourage more investment in "long-term economic activities", such as infrastructure.
The revised directive will introduce new governance and risk-management requirements, a requirement to use a depositary to safeguard members' assets and stronger powers for national supervisors; while schemes would also be required to produce a standardised pension benefit statement to provide scheme members with information about their individual pension entitlements.
As previously announced, the Commission does not plan to introduce new solvency rules for occupational funds at this stage. It had originally proposed the introduction of more stringent solvency requirements, to be compatible with those due to come into force for insurers under the Solvency II regime. However, this plan was dropped following lobbying by member states including the UK, which would have been disproportionately affected by any new rules.