WELCOME TO LCP'S IORP II HANDBOOK

Éilis McLoughlin

LCP Consultant

IORP II has finally landed with the enactment of wide-ranging pension regulations (the European Union (Occupational Pension Schemes) Regulations 2021) on 22 April 2021. There is a raft of new responsibilities on pension scheme trustees and most of the new requirements are effective immediately. This handbook sets out these new requirements in more detail and helps you focus on the immediate priorities for your pension scheme.

Governance

The regulations require trustees to put in place effective systems of governance and internal control. Roma Burke will consider these requirements in more detail in the Governance section, including:

  • The “Fit and Proper” regime for Trustees with new qualification and experience requirements
  • The need to establish and appoint Key Functions
  • Additional requirements on disclosures to members
  • Requirements in relation to written policies and outsourcing

Roma will also examine the new powers provided to the Pensions Authority to support a transition to a forward-looking, risk-based regulatory regime.

Risk Management

Risk management is a fundamental element of the new regulations. Indeed, the Pensions Regulator has stated that he believes the greatest impact of the new requirements will be in the area of risk assessment and management. Conor Daly will examine the new requirements in the Risk section, including:

  • The establishment of a Risk Management Function
  • What an effective Risk Management Strategy looks like
  • What is expected of trustees for ongoing monitoring and reporting of key risks
  • The Own-risk assessment and what trustees can expect to see in such a report

Investment

The new regulations have also amended the Pensions Act to insert detailed investment rules. Oliver Kelly will consider the requirements in more detail in the Investment section, including:

  • The application of the investment rules to all schemes
  • The new requirements in relation to Statements of Investment Policy Principles (SIPP)
  • The implications for investment strategy of new responsibilities in the area of Environmental, Social and Governance (ESG) factors.

What next?

Finally, in the What next? section, we set out the next steps for trustees and pension scheme managers to ensure compliance with the regulations having regard to the implementation timelines, limited derogations and stated regulatory focus.

We hope you find the handbook useful as you navigate through the IORP II maze. As always, please CONTACT US with any queries arising. We would be delighted to help clarify any detail, and assist you in kick-starting the work to ensure your scheme is fully compliant.

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