Pension Funds - IORP II Directive
The EU Directive on the Activities and Supervision of Institutions for Occupational Retirement Provision (2016/2341, IORP II Directive) was transposed into national law on January 13, 2019, and serves to further develop the supervisory laws for IORPs. Major innovations of IORP II concern in particular new governance requirements, new rules on risk management, and enhanced information and reporting obligations towards scheme members and beneficiaries.
As part of the new governance requirements under the Directive, IORPs have to establish independent key functions. This includes an independent risk management function, an internal audit function as well as an actuarial function. As a fundamental rule, a key function may be outsourced to an external service provider.
Under the Directive, IORPs are also required to implement an own risk assessment that has to be carried out for the whole risk profile at least every three years.
Germany's Federal Financial Supervisory Authority BaFin plans to send circulars by the end of July 2019 with minimum requirements for governance and for the own risk assessment of IORPs. In this context, the due date for the first comprehensive own risk assessment will also be specified.
Meyerthole Siems Kohlruss (MSK) offers support in implementing the IORP II Directive. This includes in particular the execution of key functions like the actuarial function according to an outsourcing model that is in compliance with supervisory laws, comprehensive support in matters of risk management and risk assessment (Own Risk and Solvency Assessment, ORSA), as well as with any further procedural and strategic issues.