Documents considered by the Committee on 25 January 2017 Contents

8Financial services: occupational pension funds

Committee’s assessment

Legally and politically important

Committee’s decision

Cleared from scrutiny

Document details

Proposed Directive to consolidate and amend legislation on the activities and supervision of institutions for occupational retirement provision.

Legal base

Articles 53, 62 and 114(1) TFEU; co-decision; QMV

Department

HM Treasury

Document Number

(35944), 8633/14 + ADDs 1–5, COM(14) 167

Summary and Committee’s conclusions

8.1Institutions for Occupational Retirement Provision, more commonly known as occupational pension funds, are collective schemes which manage financial assets on behalf of employers in order to provide retirement benefits for their employees. A proposed Directive to recast (consolidate and revise) Directive 2003/41/EC, which sets out a minimum harmonisation framework for occupational pension schemes and their supervision, has been under scrutiny since 14 May 2014.

8.2The Government had opposed the draft Directive but when it became plain that it would not be able to prevent its eventual adoption it concentrated on securing a text which removed threats to the UK’s governance regime for occupational pension funds. Now, very belatedly, the Government tells us of developments on the proposal since March 2015, which have culminated in its adoption in December 2016. It says that its efforts have removed the possibility of the Commission or the European Insurance and Occupational Pensions Authority introducing subordinate measures under the Directive, the need for compulsory depositaries and a requirement for professional qualifications for all individual trustees of funds. The Government apologises for not reporting earlier on negotiation developments. It notes that it abstained, on parliamentary scrutiny grounds, from the Council vote adopting the Directive.

8.3We note the relatively good outcome on this proposed Directive, the fact that there was no breach of the scrutiny reserve resolution, and the Government’s apology for the scrutiny failings. These were extreme: the Committee was given no information between March 2015 and December 2016, even though the proposals were concluded by COREPER on 30 June 2016 and adopted by the Council on 8 December 2016.

8.4While now clearing the proposed Directive from scrutiny, we remind the Government that, in the context of EU legislation being negotiated in the pre-Brexit period, its timely and prompt contributions to parliamentary scrutiny remain highly important. We note that the transposition deadline for these proposals is 12 January 2019.

Full details of the document

Proposed Directive on the activities and supervision of institutions for occupational retirement provision (recast): (35944), 8633/14 + ADDs 1–5, COM(14) 167.

Background

8.5Institutions for Occupational Retirement Provision, or IORPs, more commonly known as occupational pension funds, are collective schemes which manage financial assets on behalf of employers in order to provide retirement benefits for their employees. The IORP Directive, Directive 2003/41/EC, set out a minimum harmonisation framework for occupational pension schemes and their supervision, including rules which oblige occupational pension funds to invest their assets prudently, in the best interest of members and beneficiaries.

8.6In April 2014 the Commission presented this draft Directive to recast (consolidate and revise) the IORP Directive. The revision was to be confined to new rules on the governance of schemes and the information that schemes should provide to their beneficiaries.

8.7Both the previous Committee and the then Government were concerned about the lack of justification for the proposal, subsidiarity issues and the practical consequences of the measure. Our predecessors asked to hear from the Government about its continued efforts to forestall the draft Directive, including the results of its detailed consideration, with the UK pensions sector, of the potential impact of the proposal. In December 2014 they heard that the Presidency hoped to secure agreement to a General Agreement on a considerably amended and more flexible text, that the Government would not support such a General Approach and that, in effect, it still hoped to see the proposal aborted. In January 2015 the previous Committee reported that a General Approach had indeed been agreed, with only the UK not supporting the compromise text. It said also that attention would now turn to the European Parliament’s ECON Committee, which had yet to begin consideration of the draft Directive and that the Government would engage with MEPs to ensure they were fully aware of the concerns that the proposal raised. Our predecessors then said that:

The Minister’s letters of 5 December 2016 and 23 January 2017

8.8In March 2015 the Government reported the expected timetable for European Parliament consideration of the proposed Directive and that trilogue discussions might begin in December 2015 or January 2016. Only now does the Government tell us, belatedly, of developments on the proposal. In his first letter the Economic Secretary to the Treasury (Simon Kirby) mistakenly refers to earlier correspondence not relevant to our consideration of this issue; in his second letter the Minister acknowledges this mistake an apologises for the confusion it has caused.

8.9That aside, in these two letters the Minister says that:

8.10 The Minister comments that:

The Minister’s second letter of 23 January 2017

8.11In a fulsomely apologetic letter about scrutiny failings in relation to a proposed Regulation concerning prospectuses69 the Minister says:

“I would also like to take this opportunity to apologise for the delay in updating the Committee on the European proposal for activities and supervision of institutions for occupation retirement provision (IORPs).”

Previous Committee Reports

Thirty-seventh Report HC 219-xxxvi (2014–15), chapter 1 (18 March 2015), Twenty-eighth Report HC 219-xxvii (2014–15), chapter 8 (7 January 2015), Twenty-fifth Report HC 219-xxiv (2014–15), chapter 7 (10 December 2014), Sixth Report HC 219-vi (2014–15), chapter 3 (9 July 2014), First Report HC 219-i (2014–15), chapter 13 (4 June 2014) and Fiftieth Report HC 83-xlv (2013–14), chapter 6 (14 May 2014).


69 (37356) 14890/15 + ADDs 1–3, (37610), 7283/16: see chapter 9 in this Report.




27 January 2017