Finalised legislative changes to the IORP II may still apply to the UK before the country makes its departure from the EU.

Changes to the EU's 2003 pensions Directive, IORP II, aims to bring their existing requirements in line with the insurance industries Solvency II Directive which is designed to strengthen the internal market by encouraging the development of cross-border pension schemes.

After the vote was announced pension schemes may have too quickly rejoiced in the fact that the new legislation would not be applied to them.

However, the finalised version of the Institutions for Occupational Retirement Provision, IORP, was published last week and may still be implemented whilst the UK is still a member state.

Before the changes are implemented the directive is to go through the Committee of Permanent Representatives before going on to the EU parliament and transposed into each member states native language and then published to the official journal.

From that point all EU member states will have two years to implement the changes.

The speed of this process and date of implementation will effect whether UK pension schemes will need to comply.

This could mean the UK will be in a position of finalising exit arrangements whilst also still being obliged to implement the legislative changes of the IORP II initiative.

James Walsh, Policy Lead: EU & International at the PLSA sees this 'as much more than a revision' as the new requirements grows the number of articles from 24 to 81 with a significant change to the long-standing rules on funding of cross-border schemes.

Article 15.3 still requires these to be fully funded at all times, but the text now continues;

"If this condition is not met, the competent authority of the home Member State shall promptly intervene and require the IORP to immediately draw up appropriate measures and implement them without delay in a way that members and beneficiaries are adequately protected'.

This allows cross-border schemes to have deficits and put recovery plans in place.

Despite the concern that this is 'more than a revision' some are more confident that the changes will not disrupt the UK too much.

Much of the directives will cover governance issues and as Georgina Beechinor of law firm Sackers said:

"I don't think in practice there are going to be major differences in the UK pensions, because of a lot of the focus here is on governance and of course the government and the regulator have done so much in recent years in this area"

James Walsh confirmed that the PLSA would be providing a briefing on the IORP II for its members, but experts warned schemes it is all very much "wait and see".

First published 14.7.2016

ceripugh@wilmingtonplc.com