1 / 16

ESTABLISHING IORPs

Pan-European Pensions. ESTABLISHING IORPs. ANNE MAHER Chief Executive The Pensions Board London Ireland 5 October 2005. AGENDA. What is an IORP? Where will they locate? Next steps. IORPs. Directive definition of IORPs

jyarbro
Download Presentation

ESTABLISHING IORPs

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Pan-European Pensions ESTABLISHING IORPs ANNE MAHER Chief Executive The Pensions Board London Ireland 5 October 2005

  2. AGENDA What is an IORP? Where will they locate? Next steps

  3. IORPs Directive definition of IORPs • ‘institution for occupational retirement provision’, or ‘institution’, means an institution, irrespective of its legal form, operating on a funded basis, established separately from any sponsoring undertaking or trade for the purpose of providing retirement benefits in the context of an occupational activity on the basis of an agreement or a contract agreed: • individually or collectively between the employer(s) and the employee(s) or their respective representatives, or • with self-employed persons, in compliance with the legislation of the home and host Member States, and which carries out activities directly arising therefrom.

  4. IORPs Key Elements • Operating on funded basis • Established separately • Sponsoring undertaking • Legal persons, public bodies and natural persons • Acting “as an employer or in a self-employed capacity” • Context is of benefits relating to retirement from employment or self-employment • Limited to activities referred to in Directive

  5. IORPs Member States specify what are IORPs under domestic legislation Defined in Directive as much by what they are not as what they are Aims to accommodate different national systems Includes institutions with or without legal personality Member States can decide whether an entity is in or out of the Directive (subject to review by European Court of Justice)

  6. IORPs Excludes • Social Security schemes • Financial institutions covered by other Directives: • Insurance undertakings (but Member States may choose to apply IORPs Directive to pension business of insurance undertakings) • UCITs • Investment firms • Credit institutions • Pay-as-you-go pension schemes • “Support Funds” (Unterstützungskassen in Germany) where scheme members have no legal rights to benefits • Book Reserve schemes (as in Germany, Austria, Sweden)

  7. IORPs Small Pension Institutions and Statutory Schemes Member States may choose not to apply Directive in whole or in part to schemes with less than 100 members Small schemes have right to apply Directive on voluntary basis Member States can exclude application of Articles 9 -17 to IORPs where retirement provision is made under statute – guaranteed by a public body

  8. IORPs Requirements Limit activity Separate legal entity Meet various conditions on operation, governance and member information Subject to competent authorities Meet technical provisions and funding requirements Comply with investment requirements Allow appointment of managers and custodians in other Member States Allow cross-border activity

  9. LOCATION • Member States must allow: • Undertakings in their territories to sponsor IORPs located in other Member States • IORPs in their territories to accept sponsorship from undertakings located in other Member States which is ‘cross-border’ activity • Single employer/single country scheme might consider re-location • Multinational employer might consider: • Pooling investments • Pooling services • Merging schemes in one location

  10. LOCATION Regulatory conditions needed for Cross-Border • Recognition by home country supervisor • Special conditions: • Authorisation in home country • Fully funded at all times • Prudential rules: home country of IORP • Social and labour laws: host country of beneficiaries • Host state may prescribe additional investment constraints • Host state may require information requirements as imposed on local schemes in that state • In practice may require ring fencing

  11. LOCATION Reasons to relocate • Single employer/single country scheme • Regulatory/supervisory regime? • Multinational employer • Better governance/control • Single governance regime • Economies of scale/cost savings • Corporate change/culture • Accommodate mobile employees

  12. LOCATION Influences on choice Tax arrangements Pension tradition/services available Availability of tried and tested pension skills/resources Regulatory/compliance regime Ability to accommodate countries outside EU

  13. LOCATION Possible Member State Competition Benefits to being location of choice Ireland and Luxembourg being mentioned

  14. LOCATION Possible changes for pension industry • Consolidation of investment services • Asset management • Fund Administration • Custody • Consolidation of pension services • Actuarial • Legal • Benefit consulting • Benefit administration • Accounting • Compliance • Increased EU-wide competition and pressure on charges

  15. NEXT STEPS Clarification of some Directive requirements Finalisation of Protocol between Member State pension supervisors Consideration and decision on location by pension scheme sponsors and those managing schemes

  16. IN CONCLUSION • Pensions Directive • Is a first step • Likely to be catalyst • Pan-European Pension Funds • Will take time • But WILL come about

More Related