Dutch legislation already largely reflects IORP II, including governance and ESG considerations. Some features, however, are new, with key functions, certain communication requirements, and additional requirements for cross-border transfers representing a significant change.
IORP II therefore mainly affects certain provisions relating to governance (in particular, the establishment of the three key functions, risk management, actuarial and internal audit), risk management and member communications. It also strengthens the position of members and beneficiaries in the event of a cross-border bulk transfer.
New information requirements will see the reintroduction of a pension estimate based on a member’s expected retirement date (this had previously been dropped from Dutch legislation). In addition, the following information must all now be provided:
IORP board members and scheme managers are considered fit if their qualifications, knowledge and experience are collectively adequate to enable them to ensure a sound and prudent management of the IORP. A person is proper if they are of good repute and integrity. The DNB determines this based on how board members or scheme managers act.
In relation to key functions, an IORP has a risk management function, internal audit function and actuarial function. The holders of the risk management function, internal audit function or actuarial function are required to report material findings and recommendations to the IORP’s management. If the holder of the risk management function, internal audit function or actuarial function is also a member of the IORP board, the material findings and recommendations are also reported to the supervisory board or the review committee (‘Visitatiecommissie’).
The holders of the risk management, internal audit and actuarial function are required to notify the DNB as soon as possible if the IORP board does not take timely corrective measures after being informed of either a substantial risk that the IORP will not meet a key legislative requirement (and that this may have serious consequences for the interests of members and/or other beneficiaries); or a significant breach of the requirements laid down by or pursuant to the law for the IORP and its activities. There are protections in place to ensure that, when making a report to the DNB in good faith, the holder of the risk management function, internal audit function or actuarial function is protected.
Cross-border bulk transfers will be subject to approval by at least two thirds of active and deferred members, and by at least two thirds of pensioner members, and by the sponsoring employer. Such transfers also require the permission of the DNB.
