03.12.18 Draft law IORP-II: Importance for IORP’s
Last Friday, the draft law transposing the IORP-II Directive (Directive 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision) and amending the Act of 27 October 2006 on the supervision of institutions for occupational retirement provision was submitted to Parliament.
This draft law provides for a number of important amendments to the IORP-Act, namely the Act on the supervision of institutions for occupational retirement provision (IORP’s). In addition to a number of new provisions on the cross-border transfer of supplementary pension rights, the main changes concern the governance and information requirements of IORP’s.
A number of obligations are explicitly included in the IORP-Act itself, whereas previously they were only specified in the FSMA circular and accompanying note on the 11 principles of corporate governance. Certain changes in the law will therefore not entail any change for the IORP’s in practice.
Below, we present an overview of the most significant changes concerning governance:
- Draft of three-yearly policy statements on risk management, internal audit, actuarial activities (if relevant), outsourcing and remuneration policy;
- Organize the four key functions (internal audit, actuarial function, compliance function and risk management function). Only the risk management function is a real new function;
- Draw up a remuneration policy applicable to all members of the operational bodies, key functions, persons whose professional activity has a material impact on the risk profile of the IORP and external services providers;
- Draw up a (at least) three-yearly own risk assessment;
- Preliminary Fit & Proper assessment by the FSMA of the members of the operational bodies and key functions.
In addition, an extensive number of provisions on information requirements are included in the IORP-Act.
Belgian IORP’s will therefore have to fulfill the same information requirements regarding persons subject to Belgian social legislation as regarding persons subject to foreign social legislation.
Besides these information requirements, Belgian IORP’s will of course still have to take into account the information requirements in other social legislation (e.g. the Belgian Act on the supplementary pensions).
A separate legislative initiative will be taken to guarantee the level playing field between IORP’s and insurers managing pension schemes.
The risk management function must be installed by 31 December 2019 at the latest. By 31 December 2020, the IORP must have implemented the other innovations of the act.
In particular regarding the governance obligations, IORP’s will have to integrate a number of new functions and policy statements into their governance. In this context, it will be necessary, among other things, to make a global exercise based on a specific to-do list and to verify all governance documents.
Lydian can of course assist you in taking the necessary steps to make your IORP compliant with the new rules.
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