AEIP reverses previous stance, urges against use of Solvency II for IORPs
EUROPE - Solvency II should not be used as a basis for the revised IORP directive the European Association of Paritarian Institutions of Social Protection (AEIP) has said, changing its stance following an earlier endorsement of the regulations.
In a draft response to the European Insurance and Occupational Pensions Authority (EIOPA), the AEIP now argued that that the basis for revisions to the IORP directive should be the existing directive itself, rather than Solvency II as was previously argued.
The Brussels-based organisation further argued that a revised IORP directive should be able to handle a number of pension systems, including hybrid schemes, as well as allow for sufficient flexibility for decision making at national level.
The AEIP's position is given in a draft response to EIOPA's Call for Advice (CfA) on the IORP directive, which closed last week.
EIOPA has yet to publish any submissions, as a second CfA is intended to launch in October, following criticism from a number of quarters that the consultation period was too brief.
Its deadline to report back to the Commission is in mid-December.
AEIP said it expected the second call for advice to concentrate on the application of Solvency II to pensions.
In its current response, the group takes the view that its members in most EU countries do not compete with other financial institutions.
It further argued that the decision to bundle pension benefits into a cross-border scheme was not one made by the IORP, but rather by the employing company in an effort to consolidate risk.
The AEIP noted that the main barriers to setting up cross-border activity were at present fiscal issues and resistance from local stakeholders, as well as the high initial legal cost due to the currently vague definition of the vehicles.
Additionally, differing labour and social laws complicated the matter.
However, it agreed in principle that the management of the occupational pension promise needed to be "legally separated from the sponsoring undertaking".
The submission follows ones by the UK's National Association of Pension Funds, urging against the use of Solvency II, as well as one by the CEA, who argued that a level playing field should be applied to both pension funds and the insurance industry.