Internal audit under IORP II

Institutions for Occupational Retirement Provision

On Jan. 13, 2019, the revised directive for Institutions for Occupational Retirement Provision, or IORP II for short, entered into force. This new directive applies to all European institutions for occupational retirement provision, called IORPs (called pension funds in the Netherlands).

In addition to qualitative requirements regarding equity, solvency and requirements regarding the provision of information to pensioners, there is in particular a comprehensive set of requirements for the internal control system and other components of the governance system. This includes guidelines for the three key functions of risk management, the internal audit function and the actuarial department.

Requirements Internal Audit Function and Risk Management Function

IORP II requires a pension fund to provide for an internal audit function and risk management department in a manner commensurate with the size and complexity of the work. Requirements are imposed on the internal audit function and risk management function in terms of qualifications, knowledge and experience, reputation and integrity.

Article 24 paragraph 2 states that the internal audit function may not perform any other key functions in addition to filling the internal audit function. A combination with risk management is thus excluded and vice versa, of course, the same applies. In addition, DNB has formulated extensive suitability requirements for both positions.

Outsourcing under IORP II

Fortunately, legislation allows for full or partial outsourcing of both functions. A solution that (smaller) insurers have often already opted for with the advent of Solvency II.

As a specialist in internal audit and risk management, ARC People can fulfill your internal audit function or risk management function in the required independent manner. We have extensive experience with this at other financial institutions and pension funds.

Outsourcing to ARC People offers you the following benefits:

  • Thorough knowledge of and experience with the internal audit function and risk management at financial institutions;
  • High quality, meeting regulatory and DNB requirements;
  • Able and willing to fill the role of key function holder and/or filler effectively and efficiently;
  • Quickly up to speed by available basic documentation such as audit charter, audit manual, which meet the standards of the professional association of internal auditors, IIA;
  • Cost-effective approach at competitive rates;
  • Pension fund specific expertise (such as risk management, IT and outsourcing);
  • Large network of experienced retirement specialists;
  • Experience with the regulator DNB.

We would be happy to talk to you further about the possibilities, You can contact Marc van Heese, partner at ARC People: 06-52073162, or Hans Sieraad, associate Pension Funds 06-51389261.

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Marc van Heese RO RE CIA
Hans Sieraad RA