The high stakes of stakeholder group reform
Changes to the governance and funding structure of the European Insurance and Occupational Pensions Authority (EIOPA) now seem inevitable, after it was adopted as one of the core policies for new European commissioner Jonathan Hill.
Hill – Commission president-designate Jean-Claude Juncker’s choice for the newly created financial stability, financial services and capital markets union brief – must find a way to “eliminate” any direct payments from the EU budget or national regulators to EIOPA and its two fellow European supervisors.
The instruction by Juncker that the supervisors should be “wholly financed” by the sectors they oversee means a levy is inevitable, which is perhaps why James Walsh of the UK’s National Association of Pension Funds (NAPF) believes it would be a difficult issue to fight.
The potential reform of EIOPA’s stakeholder groups has caused concern that the occupational pensions stakeholder group (OPSG) will be merged with its insurance equivalent.
However, despite fears that governance reforms will allow insurance issues to dominate, not all of the proposals are unwelcome.
The suggestion that the appointment of OPSG members should be staggered, rather than a completely new group of members joining every two and a half years, is viewed as common sense.
This would lessen the administrative burden and allow the groups to continue functioning all year round, rather than needing to reassess technical points of order at the first few meetings immediately after a new cycle.
Philip Shier, senior consultant at Aon Hewitt in Dublin and a member of the OPSG on behalf of Groupe Consultatif Actuariel Européen, says this would also allow for greater continuity within its work.
A more contentious issue is the level of representation for consumer champions and small and medium-sized enterprises (SMEs), with the two groups claiming five seats and one seat, respectively, on the OPSG.
Because IORPs currently hold a further 10 of the 30 seats, it is hard to see how such an increased presence would not result in a diminished voice for pensions.
“It would be a concern for us,” says Walsh, the NAPF’s EU policy lead. “It is important to have SME and consumer voices well represented but, if it was at the detriment of representatives of workplace pension schemes, it would be a serious loss.
“In fact, there is a case for asking whether we’ve got enough representation from workplace pensions. Maybe some of the academic or other positions should be looked at first.”
If insurance and pensions remain separate, it does not mean they will keep their distance from each other, says one OPSG member.
Speaking to IPE anonymously, the OPSG member notes that joint decisions by the groups have been possible in the past, and highlights the work undertaken on the impact of the European Markets Infrastructure Regulation and how central clearing requirements cause problems for both institutional groups.
“We will possibly look at more issues where we can co-operate,” the stakeholder adds, “but, at the same time, we have more expertise on pensions and insurance in the [separate] stakeholder groups.”
A second OPSG member warns of the risks of a merger, saying occupational pensions must remain its own policy area. The member does see the proposed reform as an opportunity for other changes. “One could consider extending the mandate of EIOPA, not only to cover occupational pensions but also private pensions.”
However, because any changes would require support from the European Parliament – which demanded separate stakeholder groups in 2010 – the proposals could yet be challenged.