The new IORP Act is on its way!

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Date:
04 Dec 2018

On Friday 30 November, the Bill implementing the IORP II Directive and modifying the IORP Act of 27 October 2006 was finally  introduced in Parliament.  If everything goes well, the Bill will be enacted before year’s end and will enter into force on 13 January 2019.  The deadline for transposing the IORP II Directive into Belgian law will be met just in time.

The Bill, introduced in the House of Representatives on 30 November 2018, aims to transpose the IORP II Directive into Belgian law. It modifies a significant number of provisions of the current IORP Act of 27 October 2006.  One could thus speak of a Belgian IORP II Act.

The most important changes are:

  • Cross-border activities

The draft IORP Act includes a procedure for cross-border transfers.  It also slightly adjusts the “fully funded at all times” requirement applicable to Pan-European pension funds.

  • Governance of IORPs

The draft IORP Act focuses much attention on the risk-management system.  It requires IORPs to carry out their own risk assessment on a regular basis.

In future, IORPs must – as a rule – have the following four key functions:

  1. a risk-management function;
  2. an actuarial function (unless the IORP only manages pure DC schemes);
  3. a compliance function; and
  4. an internal audit function. 

Besides its existing policies (e.g., an outsourcing policy, a contingency plan), each IORP must also draw up a remuneration policy.

  • Information requirements

In line with the IORP II Directive, the draft IORP II Act contains many information requirements.  Each IORP will have to examine its current information and communication policy to ensure it is still compliant and adapt the policy accordingly.  In future, benefit statements will be called “Pension Benefit Statements” and must be adjusted on certain points.

The Bill contains transitional measures for existing IORPs:

  • The new risk-management function must be in place at the latest on 31 December 2019;
  • The compliance officer, actuary and internal auditor in office on 13 January 2019 can stay in office until the end of their appointment, or until 31 December 2020 at the latest.  After 31 December 2020, the IORP must renew their mandate or appoint new persons to carry out these key functions following the new procedure provided for in the Bill;
  • All IORP documents/policies must be drafted or amended by 31 December 2020 at the latest.

> Action point

A new Act on IORPs will soon come into force.  It is time for IORPs to start preparing themselves.