IORP II: Pensions Authority Issues Updated Guidance on Own-Risk Assessment

The Pensions Authority has published updated guidance on the own-risk assessment requirement under the IORP II Directive, clarifying its expectations for Irish occupational pension schemes that have not yet completed or embedded a satisfactory ORA process.

The own-risk assessment is one of the more demanding governance requirements introduced by IORP II. It requires trustee boards to conduct a forward-looking assessment of the risks facing the scheme, covering investment risk, funding risk, operational risk, and — increasingly — climate and sustainability-related risks. The assessment must be proportionate to the size and complexity of the scheme, documented in a formal report, and reviewed at least every three years or following any significant change in the scheme's risk profile.

The updated guidance clarifies several areas that had generated uncertainty among trustees. On proportionality, the Authority confirms that smaller schemes may conduct a simplified ORA, provided the process is genuinely analytical rather than a formulaic tick-box exercise. On climate risk, the guidance signals that the Authority expects all schemes, regardless of size, to at least consider the materiality of climate-related risks to their investment portfolio and funding position, even if a full scenario analysis is not required at this stage.

The Authority also addresses the relationship between the ORA and the scheme's statement of investment policy principles, confirming that the two documents should be developed in a coordinated way and that trustees should be able to demonstrate that the ORA findings have informed investment strategy decisions.

IAPF member schemes can access a practical ORA template and a summary of the updated guidance through the member publications library.