Following almost a decade of discussion, on and off, the EC Pensions Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision (IORPs) has now been published in final form on the EU Official Journal website, and must be implemented in all EU Member States before 23 September 2005*.

* Member States may delay the application of certain Articles to schemes operating purely within their own jurisdiction until 23 September 2010. These cover limits on self-investment and a requirement for schemes which themselves (rather than the sponsoring employer) guarantee the liabilities, to retain a safety buffer (rather akin to the capital reserve requirements imposed on life offices).

The Directive is almost identical with the version definitively adopted on 13 May 2003 by the Council of Finance Ministers, as previously amended by the European Parliament on 12 March 2003. Apart from updating citations and cross-references to other Directives, in particular the new life assurance Directive 2002/83/EC (5 November 2002), the only change made is to paragraph 13 of the preamble, where "With a view to ensuring financial security in retirement" is now rendered "When aiming at ensuring...".

The Directive aims to facilitate a genuine single pan-European market for occupational retirement provision. It lays down rules on what institutions for occupational retirement provision (ie employer-sponsored pension schemes), as financial service providers, can and must do.

State social security systems are exempt from the scope of this Directive, as are pay-as-you-go and book reserve arrangements, and also (at the discretion of individual Member States) purely domestic schemes with fewer than 100 members or beneficiaries. The UK is likely to take advantage of this last exemption. The Directive does not apply to UK life offices, which are covered instead by Directive 2002/83/EC; unless the government chooses otherwise, in which case their occupational pension business will need to remain strictly ring-fenced.

The Commission had two issues in mind when drawing up the original draft: security and efficiency. The Directive covers these under four main headings:

1. Prudential supervision.
2. Funding.
3. Investment rules.
4. Cross-border activities.