EUROPE - The European Commission has given itself too little time to assess the full impact of Solvency II-type accounting rules and should push back its deadline for a revised IORP directive, pensions industry experts have argued.
At a recent public hearing in Brussels, a number of pension fund associations and plan sponsors voiced concerns over the "tight" deadline the Commission had set for publishing the final text of the revised directive.
In a previous interview with IPE, Gabriel Bernardino, chairman at the European Insurance and Occupational Pensions Authority (EIOPA), said the organisation would launch a quantitative impact study on the so-called 'holistic balance sheet' (HBS) approach by the end of this month.
He added that EIOPA expected to present its first report on the results by the end of September, which would then allow the Commission to publish its final proposal on the revised directive on Institutions for Occupational Retirement Provision (IORP) in the fourth quarter.
While the pension fund industry has largely welcomed EIOPA's view on the need to conduct a full impact assessment of the HBS approach, several attendees at the public hearing in Brussels argued that similar studies would be needed on other proposals within the directive.
Klaus Stiefermann, managing director of the German pension fund association Aba, said: "We are seeking to harmonise the regulation for occupational pension systems across 27 member states. We cannot just switch and implement blindly the new rules of the Solvency II framework within the IORP directive without measuring their real effects. We just need more time."
Stiefermann went on to say that the German association felt "comfortable" with the possibility of introducing the second and third pillars of Solvency II - which focus on governance and disclosure, respectively - within the IORP directive.
But he argued that the Commission would need to analyse the impact of the application of the first pillar - which focuses on quantitative requirements - in great depth.
"If we do it step by step, we will be able to improve our pension system, as well as [build the trust of] those 66% of European employees who currently contribute to occupational pension plans," he said.
Chris Verhaegen, chair at EIOPA's occupational pension stakeholder group, also argued that full proportionality would be required for applying the general governance and supervisory requirements.
"Creative approaches will be needed to adapt the different functions proposed by the new IORP directive," she said. "However, we will need more time to design this adequately."
She added: "The impact of preferred modification in a governance requirement has to be assessed under different scenarios, and those should not only consider cost but also structure changes that can occur."