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IORP II Governance Framework

The IORP II Directive requires every Irish occupational pension scheme to implement an effective system of governance — a structured set of policies, processes, controls, and people that ensures the scheme is managed in the interests of members and beneficiaries. This requirement is set out in Article 21 of IORP II and transposed in Part VIB of the Pensions Act 1990 (as inserted by the Pensions (Amendment) Act 2022, implementing S.I. 128/2021). The system of governance is not a tick-box exercise. The Pensions Authority expects trustees to demonstrate that governance arrangements are proportionate to the nature, scale, and complexity of the scheme — and that they are operative in practice, not merely documented.

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System of Governance: Core Requirements (Article 21 IORP II)

The proportionality principle means a smaller scheme may apply simpler governance structures than a large multi-employer scheme. However, proportionality reduces how requirements are implemented, not whether they apply. All schemes subject to IORP II must have a system of governance.
Article 21 requires every IORP to have in place, at minimum:
  1. Written governance policies covering all material risk areas
  2. A risk management function (with an appointed Key Function Holder)
  3. An internal audit function (with an appointed Key Function Holder)
  4. A compliance function (with an appointed Key Function Holder)
  5. An actuarial function, where the scheme provides biometric risk coverage, investment performance guarantees, or defines benefit levels (with an appointed Key Function Holder)
  6. An internal control system encompassing the above functions
  7. Human and technical resources adequate to support governance
Each Key Function Holder must meet fit and proper requirements under Article 23 IORP II. See KFH obligations →

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Written Policies: What Is Required

The governance framework must be underpinned by a suite of scheme-specific, board-approved written policies. Generic templates that have not been adapted to the scheme’s circumstances do not satisfy this requirement.

Investment Policy

Required under Article 30 IORP II. Must cover investment objectives, asset allocation, permitted asset classes, risk limits, use of derivatives, and ESG/sustainability considerations. Must align with the scheme’s ORA risk appetite.

Risk Management Policy

Required under Article 25 IORP II. Documents the risk management framework, risk appetite, risk tolerance limits, risk identification methodology, and the process for escalation and reporting.

Remuneration Policy

Required under Article 22 IORP II. Must cover the remuneration principles applicable to persons carrying out key functions, and how remuneration is aligned with prudent risk management.

Contingency Plan

Required for operational continuity. Must identify key dependencies, business continuity arrangements, and the process for managing a significant operational disruption.

Outsourcing Policy

Required where the scheme outsources any activity or function. Must define the criteria for selecting service providers, oversight mechanisms, and escalation procedures. (Article 31 IORP II)

Internal Audit Policy

Documents the scope, frequency, methodology, and independence requirements for the internal audit function. Must include the process for addressing and tracking audit findings.

Actuarial Policy

Required where the actuarial function is active. Covers the scope of the actuarial function, the basis for actuarial assumptions, and the process for producing and reviewing the ACS.

Data Strategy

Required under Article 21(5)(f) IORP II. Documents how the scheme manages data quality, data security, member data accuracy, and IT system governance.

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Policy Review Cycle

All written policies must be reviewed at least every three years, and immediately following any significant change in the scheme’s operations, risk profile, or regulatory environment. A policy that has not been reviewed within three years is a compliance deficiency that the Pensions Authority will identify in a desk review.
Each policy review must be:
  • Conducted formally by the trustee board (or by a delegated committee with board oversight)
  • Recorded in trustee meeting minutes
  • Evidenced by a revised, dated, board-approved policy document
  • Stored in the scheme’s compliance evidence trail

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Governance Structure

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Trustee Board Composition

IORP II does not prescribe a minimum number of trustees, but the governance system must be adequate for the complexity of the scheme. The Pensions Authority’s Code of Practice (final) provides practical guidance on appropriate board composition. Key considerations:
  • Collective competence: The board as a whole must have the knowledge, skills, and experience to govern the scheme effectively
  • Independence: For larger schemes, the Pensions Authority expects evidence of independent thinking and challenge in trustee decision-making
  • Member representation: Where required by scheme rules or legislation, member-nominated trustees must be included

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Meeting Frequency and Minutes

There is no statutory minimum meeting frequency, but the Pensions Authority expects a documented meeting schedule that is proportionate to the scheme’s governance needs. In practice:
  • Trustee boards of active schemes typically meet at least quarterly
  • Smaller or closed schemes may meet less frequently, but must evidence that governance obligations are being discharged between meetings
  • All decisions with compliance implications must be formally minuted
Minute-taking requirements: Meeting minutes must record:
  1. Attendance and quorum
  2. Conflicts of interest declared
  3. Material decisions taken and the rationale
  4. Actions assigned (with owner and due date)
  5. Review of governance compliance items (policy reviews, ORA status, KFH reports)
Minutes are a primary evidence source in Pensions Authority supervisory reviews. Vague or incomplete minutes undermine the credibility of the governance framework.

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Fit and Proper Requirements (Article 23 IORP II / Section 64AV Pensions Act)

All trustees and Key Function Holders must satisfy fit and proper requirements on appointment and on an ongoing basis. Article 23 requires assessment of:

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Knowledge and Experience

  • Understanding of IORP II obligations and Irish pensions legislation
  • Relevant professional or sector experience
  • Understanding of the specific scheme (its members, investments, funding structure)

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Fitness (Capability)

  • Appropriate qualifications or equivalent experience for the role
  • Competence to discharge the specific function (particularly for KFHs)
  • No disqualifying conditions under the Pensions Act

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Propriety (Good Character)

  • No criminal convictions relevant to financial services or pensions
  • No adverse regulatory findings (Pensions Authority, Central Bank, or equivalents)
  • No conflicts of interest that cannot be managed

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Ongoing Training Requirement

Trustees and KFHs must maintain and develop their competence through ongoing training. The Pensions Authority’s Code of Practice specifies minimum training expectations. Trustees must be able to evidence the training undertaken.
PensionPortal.ai’s Fit & Proper Tracker records the individual assessment of each trustee and KFH, stores supporting evidence, and alerts trustees when re-assessment or training refreshes are due.

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Internal Control System

The internal control system encompasses all three lines of defence:
1

First Line: Operational Management

The trustees and scheme administrators who own and manage day-to-day risks. Responsible for implementing controls as specified in governance policies.
2

Second Line: Risk and Compliance Functions

The Risk Management KFH and Compliance KFH provide independent oversight of first-line activities. They set risk frameworks, monitor compliance, and report to the trustee board.
3

Third Line: Internal Audit

The Internal Audit KFH provides independent assurance on the effectiveness of the first and second lines. Internal audit findings must be reported to the trustee board, and remediation must be tracked to completion.

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PensionPortal.ai Governance Module

PensionPortal.ai provides an integrated governance module that operationalises the system of governance for Irish pension trustees.

Policy Registry with Version Control

Every governance policy is stored centrally with full version history. Review due dates are tracked automatically. Superseded versions are archived but accessible for audit purposes. Board approval is recorded against each version.

Meeting Management

Board meeting scheduling, agenda builder, and minute-taking templates. Actions from meetings are tracked to completion. Meeting records form part of the exportable evidence pack.

Board Pack Generation

Automated pre-meeting board packs that compile governance status, outstanding actions, policy review schedule, KFH reports, and ORA status into a single document ready for trustee review.

Fit & Proper Tracking

Individual trustee and KFH profiles with fit and proper assessment records, training history, conflict of interest declarations, and Pensions Authority notification status.

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Pensions Authority Reference

The Pensions Authority has published a Code of Practice for Trustees (final version) that provides detailed guidance on meeting the IORP II governance requirements. Trustees should read this alongside the legislation.