Key Function Holders
What are Key Function Holders?
Under IORP II, all pension schemes must have three Key Functions — independent governance roles that provide oversight and assurance over scheme operations. The individuals who carry out these functions are called Key Function Holders (KFHs). The three required functions are:Risk Management
Oversees the scheme’s risk management framework, including the ORA. Responsible for identifying, assessing, and monitoring risks.
Internal Audit
Provides independent assurance that governance, risk, and control processes are working effectively. Reports directly to the trustees.
Actuarial
Advises on funding adequacy, liabilities, investment strategy, and actuarial assumptions. Must be a qualified actuary.
Why KFHs Matter
KFHs are a cornerstone of the IORP II governance framework. They provide the independent expert oversight that trustees need to make informed decisions about scheme management. Without properly appointed, fit & proper KFHs, your scheme cannot be compliant with IORP II — and the Pensions Authority will identify this quickly in any review or ACS assessment.Fit & Proper Requirements
The Pensions Authority requires all KFHs to meet fit & proper criteria. This means they must demonstrate:| Criterion | What this means |
|---|---|
| Integrity | No criminal convictions, regulatory sanctions, or conduct issues |
| Competence | Relevant qualifications, knowledge, and experience for the function |
| Financial soundness | No undischarged bankruptcies or disqualifications |
| Independence | No conflicts of interest that would compromise objectivity (for Internal Audit) |
| Time commitment | Sufficient time available to carry out the function properly |
Who Can Be a KFH?
- KFHs can be internal (employees of the sponsoring employer) or external (professional service providers)
- The Internal Audit function must be independent — the Internal Audit KFH cannot also hold the Risk Management function
- The Actuarial KFH must be a qualified actuary (Fellow of the Society of Actuaries in Ireland or equivalent)
- One person can hold the Risk Management and Actuarial functions if they have the appropriate qualifications — but this needs careful consideration
Managing KFH Appointments in the Platform
Add a new KFH appointment
Click Add KFH. Enter:
- Full name and role
- Appointment date
- Contact details
- Whether the function is carried out internally or by an external provider
Complete the fit & proper assessment
The platform walks you through the fit & proper criteria for the relevant function. Upload supporting documentation (CV, qualifications, reference letters as appropriate).
Trustee approval
The appointment must be approved by the trustees. The platform routes this to the trustee board for approval.
PA notification
Once approved, the platform generates the PA notification letter. Submit this within 30 days of the appointment date. The platform tracks the 30-day deadline and sends reminders.
Removing a KFH
When a KFH leaves or is removed:- Record the removal date and reason in the platform
- The platform generates the PA removal notification — again, within 30 days
- Immediately begin the appointment process for a replacement — the scheme must not be without a KFH for any function
If a KFH resigns unexpectedly, the PA expects you to act promptly. Document what steps you’ve taken to find a replacement. A well-documented transition is viewed much more favourably than silence.
KFH Reporting
Each KFH should report to the trustees at least annually. The platform provides a structured reporting template for each function:- Risk KFH: Annual risk report, covering the risk register and any emerging risks
- Internal Audit KFH: Audit findings and management responses
- Actuarial KFH: Actuarial valuation update and funding position