EU pensions regulator – EIOPA
We pleased to inform members that the EU pensions regulator, EIOPA, has announced that it is ending work on a solvency based funding regime for pension schemes.
The threat of a new pension funding system based on the insurance industry’s Solvency II legislation has been one of the biggest regulatory threats to DB schemes. If implemented as EIOPA intended, with a risk-free discount rate to calculate liabilities, the Holistic Balance Sheet would have resulted in large increases in deficits.
Many of our members will be aware of the work we have done, and in particular Jerry Moriarty as vice chair of PensionsEurope, in resisting this proposal. In an Opinion published yesterday, EIOPA announced its conclusion that a one-size-fits-all solvency regime would not be appropriate. EIOPA has decided to refrain at this point in time from introducing harmonised funding or capital requirements for IORPs at the EU level.
Click here to access EIOPA's Opinion
PensionsEurope has consistently stated that additional capital requirements are detrimental for pension provision and welcomed the fact that EIOPA has acknowledged this.
In its Opinion, EIOPA now proposes to introduce a standardised risk assessment to calculate the impact on a common framework balance sheet of an IORP. PensionsEurope have since highlighted that requirements have to be proportional and small and medium size IORPs should not be overly burdened with any new risk management requirements. Risk management is essential for IORPs and they regularly carry out their own stress tests and scenario analyses as part of their own risk management processes. EIOPA proposes an additional framework, which we find unnecessary and costly.
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