Managing collective retirement schemes – occupational pension funds

KEY POINTS

Member States must ensure that IORPs:

• are only involved in retirement-benefit activities;
• safeguard their assets for members and beneficiaries if a partner organisation goes bankrupt;
• are registered and authorised by the relevant national authority, including for cross-border activities;
• have sufficient funds to cover their financial commitments;
• invest prudently in the best long-term interest of members and beneficiaries;
• operate an effective governance system that provides sound and prudent management of their activities;
• are run by people with suitable expertise, qualifications and knowledge;
• apply a sound remuneration policy for all employees;
• have risk management, internal audit and actuarial functions¹ in place;
• carry out an internal risk assessment at least every 3 years and provide a written statement of their investment policy principles;
• draw up and publicly disclose annual accounts;
• are subject to prudential supervision on issues such as solvency margins and investment rules;
• take reasonable steps to ensure continuity and regularity in performing their activities, including developing contingency plans, by employing appropriate and proportionate systems, resources and procedures, and, in particular, setting up and managing network and information systems in accordance with Regulation (EU) 2022/2554 on digital operational resilience for the financial sector (see summary).

The relevant Member State national authorities:

• must have the resources necessary to exercise prudential supervision;
• require IORPs to have sound administrative, accounting and internal control mechanisms;
• may impose administrative and other penalties for any breaches of legislation;
• have the power to review an IORP’s strategies, processes and reporting procedures, obtain internal documents they may require and conduct on-site inspections;
• may exchange information with each other and with monetary authorities without violating professional secrecy conditions.

IORPs must provide prospective and actual members and beneficiaries with clear, updated and free information. This includes:

• details of the IORP itself and members’ rights and obligations;
• pension benefit statements containing, for instance, data on contributions paid, a breakdown of costs and the value of the personal scheme;
• advice on how to obtain supplementary information;
• pre-retirement advice on benefit payout options.

Depending on the requirements in question, Member States may exempt certain IORPs that operate pension schemes with fewer than 15 or 100 members from certain conditions of the legislation. In the event that a pension fund wishes to provide its services in other Member States, however, it has to apply all the rules laid down in the directive.

The European Insurance and Occupational Pensions Authority:

• assists with cooperation between national authorities;
• ensures consistent application of EU insurance and occupational pensions legislation.

Amending Directive (EU) 2023/2864 inserts an article in Directive (EU) 2016/2341 requiring Member States, from 10 January 2030, to ensure that, when making public any information, IORPs submit that information at the same time to the collection body, and notify the European Securities and Markets Authority thereof for the purposes of making it accessible on the European single access point, set up under Regulation (EU) 2023/2859.