European pension funds are next in line after insurance companies to undergo regulatory changes. European pension providers are subject to national regulation and supervision under a directive issued by the European Commission in 2003. A revision of the European Directive on Institutions for Occupational Retirement Provision (IORP), known as IORP2 have been agreed on by the European Parliament, the Council, and the Commission on June 30th, 2016. IORP2 intends to improve pension fund governance, enhance communication to members and beneficiaries, and encourage long-term and socially responsible investments.
After much debate, the approved directive does not include any harmonised solvency rules. However, harmonised solvency rules are likely to be raised again in the future revision of the IORP Directive that could occur as soon as six years after the IORP2 comes into force. We outline the evolution of IORP regulation, starting with the Directive of 2003, till the approval of the IORP2 in June 2016. We describe the various proposals, particularly those concerning solvency requirements, made during the prolonged regulatory revision process.