Brexit progress brings
more pensions red tape ever-closer
4 October 2016
So… we now know that Article 50 will be triggered in Q1 2017 and Brexit will be implemented via the Great Repeal Act. Brexit does indeed mean Brexit. Do these new announcements mean anything new for pensions?
To put it simply, they probably do. A key Brexit question was whether IORPII (new EU pensions legislation) will need to be incorporated into UK pensions law. The IORPII legislation seeks to impose insurance-company-style governance requirements on European pension schemes. Whilst some of the requirements are helpful, there’s also a whole load more red tape for companies and trustees to tackle – and therefore new higher compliance costs for pension schemes.
In fact IORPII is fully expected to become EU law within a few weeks. All EU states will then have two years to implement it locally (some time in Q4 2018). We are told that the Great Repeal Act will incorporate all EU law at the point of Brexit (in Q1 2019) into UK law. On the face of it, by putting this all together I think this means that we can now expect IORPII to become UK law just before Brexit in 2019. This will leave the UK with the ultimate EU divorce present – a whole load more red tape.
In short, I am now expecting that the UK will indeed adopt IORPII and our pension schemes will need to comply with the new requirements in around two years’ time. But with much political uncertainty still in the air, I’m not holding my breath.
If you need help in relation to IORPII in general, and the new risk manager and internal audit functions in particular, get in touch.