The newly agreed revised IORP Directive will have to become UK law despite the vote to leave the European Union, given the overlap between the timetable for transposition of the directive and that for the UK’s remaining an EU member, pensions minister Ros Altmann has suggested.
Speaking at an event to mark the passing of two years since the Law Commission released its report on the fiduciary duties of investment intermediaries, Altmann said she was “really proud of work the UK has done within Europe to get the IORP to the place where it has ended up”.
She added: “We have protected the UK pensions industry to a large degree. It could have been a pretty big disaster in some ways.”
Qualifying her answer to a question about the UK decision on IORP II by saying that “I can’t tell you what is going to happen because, as we all know, nobody knows”, Altmann then said she would expect that, as “we are still in the EU, and we are going to be in the EU for at least another two years, by then, the IORP will have started […] we will have to adopt it anyway”.
She added: “I would hope we might want to adopt it because, if we want to stay part of a united Europe, that’s an area that makes sense to align ourselves with.
“I can’t tell you exactly what’s going to happen, but that would be my best answer for you.”
Altmann’s comments were in response to a question from Catherine Howarth, chief executive of ShareAction, a responsible investment campaign organisation that was also co-host of the event.
Citing provisions in the IORP II compromise text relating to ESG factors and climate risk, Howarth had asked Altmann to comment on whether the UK government – “whatever happens on the Brexit question” – will ensure that UK pension savers “have the same level protection as other pension savers in the EU”, whether this be through the transposition of the IORP Directive or a new law.
The IORP II Directive has still to be passed by the European Parliament, but this is largely seen as a formality, given the agreement reached on a final compromise text.
A plenary vote is understood to be due to take place in September, and there is a two-year timeline for member states to implement the directive.