The proposal for a revised EU law on workplace pension funds was passed by the European Parliament today.

The final draft of a new Institutions for Occupational Retirement Provision (IORP) Directive was passed by 512 votes to 77, with 40 abstentions.

A statement from the European Parliament suggested IORP II covered some 125,000 occupational pension funds with assets worth €2.5trn on behalf of around 75m Europeans, around 20% of the workforce.

The Council of the EU has to approve the new legislation, which is expected to be published officially in early 2017.

Member states will have 24 months to transpose it after it enters into force shortly after its official publication.

Brian Hayes, the Irish MEP who steered the legislation through the European Parliament, said: “We have achieved the right balance between respecting the differences between member states’ pension systems while also encouraging pension mobility.

“This is a good day for European pensioners, as we have brought more protection, more transparency and more security to how occupational pension funds are managed.”

The new directive does not include EU-wide solvency requirements, which was welcomed by a nine-strong a group of employer, worker and industry representatives in advance of the vote in parliament.

PensionsEurope and the European Fund and Asset Management Association (Efama) are among those putting their name to the statement.  

The parliamentary passage of IORP II has been welcomed by responsible investment organisations such as the UN-backed PRI and ShareAction.

The latter, a campaign organisation, described the vote as “a landmark moment for responsible investment in Europe” given requirements on environmental, social and governance (ESG) issues in the Directive.

It called on the UK government to commit to transposing the legislation, in particular the sections on ESG, transparency and members’ right to information, despite the June vote for the country to leave the European Union.

Prime minister Theresa May has said the government will trigger the formal separation process by the end of March.

There is a two-year timeframe for negotiations, which suggests the deadline for transposing the IORP II Directive could lapse before the end of negotiations. 

In July, the now former pensions minister Ros Altmann said the UK was likely to adopt IORP II given the timeline for leaving the EU.

The trade body for the European insurance industry has raised some concerns with the revised directive.