The new IORP Directive from the European Commission should include the same capital requirements as those in the Solvency II regulation that applies to Danish pension funds, the country’s pensions industry association has said.
Responding to last week’s publication of the revised European prudential framework for pension funds, the Danish pensions and insurance association F&P pointed out that IORP would not apply to Danish funds regardless of whether they were pensionskasser (pension savings institutions) or life insurance companies.
Peter Skjødt, executive director, told IPE: “However, it is important that [IORP II] give rise to equal rules for pensionskasser and life insurance companies in the rest of Europe, so that there is a level playing field.”
The benchmark for this is Solvency II, he said.
The new IORP framework includes a series of measures the commission says are aimed at improving governance and transparency of the pension funds in Europe, promoting cross-border activity and helping long-term investment.
Danish pensionskasser are covered by the Solvency II regime along with pensions providers incorporated as life insurance companies, as a result of a decision by the national regulator to create equal competitive conditions for the two types of business within Denmark.
“We are glad about the increased information requirement that is included in the submitted IORP directive but disappointed that the capital requirements are not included,” Skjødt said.
This omission will lead to individual customers having a different level of security depending on whether they are customers of a pension fund or a life insurance company in Europe, he said.
“The mantra should be – same risk, same requirement – which the IORP Directive submitted does not create because of the lack of harmonisation of the Solvency II capital requirements,” he said.