GLOBAL - One of the biggest challenges in moving to a risk-based supervision of pension funds is data collection, the International Organisation of Pension Supervisors (IOPS) has found.
Looking at countries such as the UK, Germany, Croatia, South Africa and Australia , among others, who followed pioneers like Denmark, Netherlands or Mexico to a risk-based supervision, the IOPS suggested data collection was a huge challenge and often underestimated by member states.
"It is no use building perfect (theoretical) systems if there is nothing to put in them and nothing to analyse," the IOPS stressed.
"Data collection proved to be a particular challenge not only in countries with developing pension industries, such as Kenya, where data is often not available, but also in highly-developed pension systems, such as the UK, where the large number of pension funds is the major challenge," the IOPS said.
It noted the UK's Pension Regulator (TPR) approach is to carry out the data collection process in stages according to scheme size.
In a new series of working papers, the IOPS aims to provide information and discussion material in relation to various questions regarding pension supervision.
One working paper in the series points out the importance of education offered by pension supervisory bodies for stakeholders, such as trustees.
Other material includes case studies on the pros and cons of integrating pension supervision with that of other financial activities and services and the use of IT in supervision.
Meanwhile, the IOPS together with the Organisation for Economic Co-Operation and Development (OECD) also published guidelines on the licensing of pension entities.
The paper, which is up for public consultation until October 5, aims to suggest a more harmonised licensing approach among the OECD/IOPS member states.
"A single set of guidelines on licensing can help increase confidence in private pension regulatory frameworks, promote cross-border provision and mutual recognition, and assist countries developing their private pension systems," the organisations state.