IORP.

IORP.

A pension scheme for employees must be offered by a licensed pension provider. Until 2011, only insurers and pension funds could obtain a licence. Since 2011, an Institution for Occupational Retirement Provision or IORP (in Dutch: Premie Pensioen Instelling or PPI) has also been allowed to administer pension schemes.

IORP: what is it?

An Institution for Occupational Retirement Provision or IORP is a new type of pension provider which invests pension contributions. It can be set up by anyone, including, apart from insurers and pension funds, employer and employee organisations, banks, asset managers, advisers and anyone who wants to set up a pension scheme. However, a licence is required.

The IORP administers defined contribution schemes by investing the defined contributions paid in. This is done by professional investors. Employees and employers have no say in the matter. A IORP is not allowed to give any guarantees, and the investment risks are borne by the employee. The IORP administration costs are paid via a separate invoice. 

The IORP itself cannot pay out pensions. When the employee retires, the pension capital accrued in the IORP must be used to purchase pension benefits. For example, from an insurer. 

The employer can, however, make its own arrangements for a partner's pension, orphan's pension or occupational disability cover. A IORP will often have an agreement in place with an insurer to make sure that this is not too costly.

IORP: the advantages 

IORP: the disadvantages

  • Low costs, because:
    • An IORP only manages the pension capital. 
    • Supervision is not as strict as for a pension fund. 
    • An IORP is not affected by existing systems or long-standing agreements and guarantees. 
    • Pensions are no longer settled by 1 party only. 
  • An IORP is allowed to administer pension schemes throughout the European Union. It is easier for companies operating in different European countries to place their pension schemes in an IORP.
  • An IORP has a short notice period, usually two months. This makes it easier for employers to make a switch if competitors offer a better proposal.
  • The risk of investing lies entirely with the employee.
  • An IORP cannot offer a guaranteed pension.
  • An IORP cannot insure the risk of occupational disability or death. If an employer wants to have this insured, insurance will have to be taken out elsewhere.

Zwitserleven IORP products

Zwitserleven has two types of IORP products:: Pension Now and PensionAccount Now. With these products, the contributions paid in will go almost entirely be used to accrue a pension for your employees. The employee has online access to his total net pension. If the employee becomes incapacitated for work, Zwitserleven will take over payment of the contribution. The surviving dependants’ pension is also insured via Zwitserleven.

Need a quote or advice?

As a good employer, you want to choose a pension that is right for your business and for your employees. We have a wide range of options to suit every type of business. Such as an investment-based defined contribution pension scheme, possibly in conjunction with Nettopensioen. A complete overview of our products is available.

If you would like to know more about this or any of our other pension schemes, or would like to get specific advice on a pension scheme for your employees, contact an independent financial adviser. Zwitserleven has an excellent relationship with a large number of professional insurance advisers.