The new IORP II pensions directive will further increase regulatory pressure on pension funds, a Dutch consultancy has warned.

In addition to communication rules and factoring in environmental, social and governance (ESG) criteria into risk management policies, IORP II would also come with conditions similar to Solvency II for insurers, said Lonneke Thissen, partner at Sprenkels & Verschuren. It also brought a requirement for pension funds to provide their own risk evaluation every three years.

Thissen was speaking at the annual conference of IPE’s sister publication Pensioen Pro. IORP II came into force in January this year, and affected funds have until January 2019 to comply.

Thissen said that pension funds were also expected to create key functions for risk management, audit and actuarial matters.

She added that pension funds, like banks and insurers, would probably also have to state an opinion about the way their required assets were calculated.

At the session about governance and bureaucratic risks, Thissen said governance had become much more complicated during the past 10 years, and had led to the establishment of new supervisory bodies and risk committees.

Thissen noted that the number of thematic surveys by supervisors had also risen significantly.

Pension funds should expect an increase in international regulation, Thissen said, adding that Dutch regulator De Nederlandsche Bank (DNB) would intensify its supervision domestically.

“Following the ongoing consolidation, players are becoming ever larger and, combined with population ageing, pension funds are increasingly posing a [systemic] risk to the Dutch economy,” she argued.

Adri Jansen, actuary and trustee at six small and medium-sized pension fund, responded that increasing supervision would cause problems for this category of scheme.

Although he said that all supervisory questionnaires made sense, he warned that board members were effectively “brought to their knees” as a result of new and highlighted regulation as well as the way in which rules are enforced by watchdogs.

Jansen noted that DNB had started to more strictly enforce existing regulation, including the rules on IT policy.

In his opinion, many trustees had lost sight of the overall view because of the amount of fragmented questionnaires they were required to complete. This came at the expense of their motivation to be involved with risk management, he said.

He added that small schemes’ budget for advisory services was limited and questioned whether this would contribute to “well-considered policy”.