IORP II

What is IORP II?

IORP II is an EU Directive that set new requirements for occupational pension schemes. The legislation for this was passed into law in April 2021 in Ireland. It resulted in increased requirements of pension scheme trustees.  Without significant changes, pension schemes won’t meet these requirements. The enhanced administration, increased governance and ultimately the substantial cost to schemes means alternative options are worth considering for trustees and members.  

If you want more detailed information about these regulatory requirements, you can refer to Your guide to IORP II. 

This page outlines information relevant to group pension schemes with only one member, where that member is no longer paying any contributions and will not pay any future contributions.

Information for trustees

If you have chosen to wind up a scheme there are five options available:  

•  Transfer to another occupational pension scheme 
•  Transfer to a Personal Retirement Savings Account (PRSA) 
•  Transfer to a Buy Out Bond (BOB) 
•  Retirement, if circumstances are right 
•  Assignment of the existing policy to the member (where the scheme has one remaining member and no contributions are being paid) 

Assignment of the existing policy to the member is an option available only to those one-member schemes where the member is no longer paying contributions and won’t be paying future contributions. The policy owner is currently you, the trustee, but once it is assigned, the member becomes the policy owner. Following the assignment, the policy is treated as a buy out bond. This option can be used for schemes invested in unit-linked investments, and those invested in with-profits.  

Why it may be appropriate for with-profits investments 

For members invested in with-profits, it allows them to remain invested in their current with-profits fund(s) and does not impact on any investment guarantees those funds may have.  

A unit price adjustment (UPA) is an adjustment which is applied to a member’s fund if they transfer out of   the scheme before the normal retirement age. This would also apply in the event of a scheme wind up. This solution allows the current scheme to wind up and assign the policy to the member with no UPA applied.

Next steps to assign the policy to the member

If you decide to assign the policy to the member, you’ll need to select the downloadable documents pack below, depending on the policy number and member number.

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Follow these steps to complete the assignment: 

1.  In the downloadable pack, read Assigning a policy to a scheme member for more detailed information, and to ensure you’re satisfied that this is the right option for your scheme.
      
2.  How to assign a policy to a scheme member will take you through the steps of how to assign the policy, the details of the documents you need, and what to do with them.
    
3.  Notify your member – You must give at least one month’s notice of your intention to wind up the scheme to satisfy the Occupational Pension Scheme (Duties of Trustees in connection with Bulk Transfer) Regulations 2009 & 2021. To help with this, we’ve drafted a template letter for which you can tailor for the member or you can write your own, if you prefer. You will need to allow the member to submit their observations within this timeframe and you will need to confirm by writing or electronic means that you have given their comments due consideration. Send this letter along with a signed copy of the Notice to discontinue contributions to the member. Do not skip this step even if contributions are not being paid. This is a legal requirement to formally begin the wind up of a scheme. 
    
4.  Once you’ve completed these steps, there are a number of documents you’ll need to sign and return to Standard Life. These can be found in the documents pack which you can download above:  

•  a signed copy of the amendments to the scheme rules and policy provisions (which should be dated before the letter of notification to the member) 
•  a signed copy of the wind-up declaration
•  a completed confirmation of activity form, in which you have provided us with the member’s contact details. We cannot complete this assignment without this information.  

You can return these to us by post to Standard Life, 90 Stephens Green, Dublin D02 F653 or by emailing customerservice@standardlife.ie 

Although the decision on how to comply with IORP II lies with the trustee, members and employers affected by this decision may wish to stay informed too.