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Impact Investing

IPE special report May 2018

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Exit Interview: Shier looks back on a labour of love

Philip Shier is what they call an industry veteran. An actuary by trade, he will be retiring from Aon Hewitt at the end of July after more than 30 years at the consultancy. The move follows another significant departure this year for Shier.

At the end of March, he stepped down from the Occupational Pension Stakeholder Group (OPSG) of the European Insurance and Occupational Pensions Authority (EIOPA) having served two terms. This included one year as the group’s chair, following the mid-mandate resignation of Benne van Popta, a senior figure in the Dutch pensions industry.

Probably unsurprisingly for a man who describes the drafting of an OPSG end-of-mandate report as “a labour of love”, Shier looks back fondly on his time with the stakeh older group. 

“I think I’m already beginning to miss that the OPSG has met without me and I’m already to some extent missing the involvement,” he says. 

“It was very interesting over the first two-and-a-half years to understand where the other members are coming from and sometimes to look at issues from a different perspective – less technical perhaps and more consumer focused – and certainly it was very enjoyable.”

Philip Shier

And when Shier was re-appointed to the second OPSG in September 2013, there was continuity among the membership but also “new acquaintances, new friends to make”, he says. 

The OPSG is one of two stakeholder groups that were formed when EIOPA, alongside two other European Supervisory Authorities (ESAs), was established in 2011 in response to the financial crisis. 

Unlike the ESAs for the banking sector and the securities sector, EIOPA has two stakeholder groups, reflecting its responsibility for the insurance sector and the occupational pensions sector; the OPSG’s counterpart is called the Insurance & Reinsurance Stakeholder Group (IRSG).

Each EIOPA stakeholder group has a term of two-and-a-half years, with members allowed to serve two terms. The third OPSG held its inaugural meeting at the end of April, in EIOPA’s Frankfurt office as per usual. 

As Shier explains, the group has 30 members drawn from a variety of constituencies, including pension funds, consumer groups, and professional associations. 

It is “certainly not a lobbying group”, he emphasises, but a group of individuals serving in a personal capacity that is charged with providing at least a majority view on EIOPA proposals, pulling together “different views from different directions”. 

And with EIOPA quite often sharing its thoughts with the OPSG on a confidential basis before going public, the stakeholder group is an important body in the pensions industry, says Shier. “The first two groups covered a lot of important topics and in some cases it was acknowledged by EIOPA that the input from the group was fundamental to the approach they eventually took,” he says.

The stakeholder group adopts a workplan every year and Shier explains that this is linked to EIOPA’s own work programme, but that it can also be proactive. An important OPSG initiative is the exemption for pension funds from the European Union regulation on derivatives, central counterparties and trade repositories regulations on central clearing (EMIR).

“It’s been pushed out a little bit further now,” says Shier, “but a long-term solution to that needs to be found if pension funds are not to be penalised for effectively adopting a risk-averse strategy by using derivatives to reduce risk.”

Shier highlights three items as the most challenging ones the OPSG dealt with when he was chair: the revision of the European Occupational Retirement Provision Directive (IORP); EIOPA’s stress test reports in January, and personal pensions. 

With respect to the first item “probably the biggest area in the debate” was around the pensions benefit statement and the issue of member communication, he says. With respect to the stress-test reports the timescale was challenging, because EIOPA’s report was published towards the end of the OPSG’s mandate. However, EIOPA was “good enough to share the document with us on an embargoed basis a bit before publication”, he adds, with the hard work a sub-group had put in also helping the OPSG to react to the stress tests. 

As for personal pensions, “there was a little bit of debate about whether it was even something we should pick up”, but the group ultimately decided it should. This was not least because, says Shier, “in some countries the third pillar is going to be a very important feature and because if you’re looking at pensions from a consumer perspective you do need to consider all three pillars”.

The OPSG’s most recent formal output on the matter was its October 2015 response to EIOPA’s consultation on the creation of a standardised Pan-European Personal Pension (PEPP). Annoyingly, however, according to Shier, EIOPA’s consultation on the development of an EU single market for personal pensions “fell at the very end of our mandate and we were unable to pull together a response before our mandate expired”.

Also, the consultation closed before the third OPSG could consider it, meaning that “there’s a bit of a gap there”. 

This leads Shier to the suggestion that the OPSG should operate continuously, with one-third of the membership renewing annually, for example.

Asked whether there are other things that should or could be done differently, he returns to the question at the beginning of the conversation about the level of awareness of the OPSG and makes a case for the stakeholder groups becoming “more visible”. 

“There is a very strong resource there,” he says, “but to a large extent they are just for EIOPA’s benefit and EIOPA may or may not decide to act on them [the stakeholder groups’ reports]. Indeed, it’s not even clear to some extent to what extent the OPSG’s or IRSG’s views are debated within the board of supervisors, for example, before EIOPA decides on its position.”

The OPSG and its insurance counterpart has therefore made a series of recommendations to increase the visibility and impact of the stakeholder groups, which include more direct interaction with EIOPA’s board of supervisors, involvement in European Parliament committee hearings with the chair of EIOPA, and greater involvement and interaction with the European Commission. 

“The Commission perhaps disappointingly weren’t regular attenders,” Shier tells IPE. “In the first OPSG the Commission was almost always in attendance at our meetings but that wasn’t the case more recently.” 

Becoming more visible to the general public should also be considered, according to Shier.

Overall, the group should “try and increase the exposure and ensure that the best value is got out of the work we do,” says Shier. 

This ‘we’, uttered just over a month after stepping down from the OPSG, can be seen as a neat grammatical reflection of Shier’s commitment to the OPSG – and his desire to see it flourish. 

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