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Managing collective retirement schemes: occupational pension funds

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Managing collective retirement schemes: occupational pension funds

Occupational pension funds in the EU benefit from the principles of free movement of capital and free provision of services. Such freedom needs to be counterbalanced by strict rules to ensure that pension fund members and beneficiaries are properly protected.

ACT

Directive 2003/41/EC of the European Parliament and the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision.

SUMMARY

Occupational pension funds in the EU benefit from the principles of free movement of capital and free provision of services. Such freedom needs to be counterbalanced by strict rules to ensure that pension fund members and beneficiaries are properly protected.

WHAT DOES THIS DIRECTIVE DO?

This directive sets out the rules governing the activities and supervision of institutions providing occupational retirement provision (IORPs)* or pension funds in all EU countries.

KEY POINTS

The directive aims to ensure a high level of protection for future pensioners (members and beneficiaries of pension funds) while guaranteeing efficient investment by establishing the following three sets of rules.

1.

Strict prudential rules to protect the beneficiaries and members of IORPs, who must have sufficient information on the rules of the pension scheme**, on the institution’s financial situation and on their rights.

2.

Investment rules adapted to the characteristics of IORPs and to the efficient management of savings. This is because IORPs invest on a long-term basis and have to diversify their assets by taking full advantage of the benefits offered by the EU’s single market and the euro. If each institution is to establish the safest and most efficient investment policy, the investment rules, and in particular the rules for investing in shares, must not be too restrictive.

3.

Rules permitting cross-border management of occupational pension schemes. This cross-border management requires mutual recognition of supervisory methods in force in the EU countries.

This directive does not concern the institutions covered by the directive on life insurance and the directive on alternative investment fund managers.

The European Insurance and Occupational Pensions Authority (EIOPA) is responsible for collecting information provided by EU countries on developments in cross-border arrangements of IORPs and for publishing such information on its website.

EIOPA may draft regulatory and implementing standards and make recommendations for the proper supervision of IORPs. EIOPA cooperates closely with EU countries and the European Commission.

WHEN DOES THIS DIRECTIVE APPLY?

From 23 September 2003.

KEY TERMS

* Institutions for occupational retirement provision(IORPs): financial institutions which manage collective retirement schemes for employers in order to provide retirement benefits to their employees (i.e. the scheme members and beneficiaries).

** Pension scheme: a contract, an agreement, a trust deed or rules setting out what retirement benefits are granted and under what conditions.

For more information see: Institutions for Occupational Retirement Provision (IORPs) on the European Commission’s website.

REFERENCES

Act

Entry into force

Deadline for transposition in the Member States

Official Journal

Directive 2003/41/EC

23.9.2003

22.9.2005

OJ L 235, 23.9.2003, pp. 10-21

Amending act(s)

Entry into force

Deadline for transposition in the Member States

Official Journal

Directive 2009/138/EC

6.1.2010

31.3.2015

OJ L 335, 17.12.2009, pp. 1-155

Directive 2010/78/EU

4.1.2011

31.12.2011

OJ L 331, 15.12.2010, pp. 120-161

Directive 2011/61/EU

21.7.2011

22.7.2013

OJ L 174, 1.7.2011, pp. 1-73

Directive 2013/14/EU

20.6.2013

21.12.2014

OJ L 145, 31.5.2013, pp. 1-3

The successive amendments and corrections to Directive 2003/41/EC have been incorporated into the basic text. This consolidated version is for reference only.

RELATED ACTS

Report from the Commission on some key aspects concerning Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision (IORP directive) (COM(2009) 203 final of 30.4.2009).

Directive 2014/50/EU of the European Parliament and of the Council of 16 April 2014 on minimum requirements for enhancing worker mobility between Member States by improving the acquisition and preservation of supplementary pension rights (Official Journal L 128, 30.4.2014, pp. 1-7).

Last updated: 26.06.2015

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