The European Central Bank (ECB) wants pension funds to report harmonised data to it in a bid to gain better insight into the sector’s potential macro-financial impact.
According to information from the ECB, it is planning to launch a public consultation on regulations sometime this summer, and to adopt the regulation towards the end of the year.
The harmonised statistical reporting required by the regulation would start in early 2019.
The pending regulation will be based on a proposal developed by a task force led by the Deutsche Bundesbank and including members from national central banks, the OECD, and the European Insurance and Occupational Pensions Authority (EIOPA), among other institutions.
According to the ECB, the idea behind the regulation was to help plug a “data gap” that makes it difficult to build “a comprehensive understanding of cash flows and the risks associated with pension obligations”.
It argued that more data would increase transparency about pension funds’ activities, making it easier “to check if they are fulfilling their promises to citizens”.
Other benefits, the ECB said, were that more public data could improve comparability and disclosure of pension funds’ obligations, and pave the way for new research on topics such as the impact of pension funds on the economy.
Information potentially of interest to the ECB includes data on pension funds’ “outstanding amounts” and transactions broken down by country, economic sector, maturity, the type of pension plan, and detailed security-by-security reporting.
The German regulator announced the ECB’s plans last year, but this week’s news could trigger fresh concerns about the introduction of a standardised risk assessment previously recommended by EIOPA (its “common framework”) and, ultimately, the Holistic Balance Sheet.
EIOPA is keen to explore further the potential impact pension funds may have on financial stability.
The ECB’s former president, Jean-Claude Trichet, has previously described pension funds as having “the potential to significantly disrupt the smooth functioning of the financial system” and playing “a key role for the provision of future income for households”.
The new regulation would enhance the volume and quality of available data for studying the macro-financial effect of pension funds, according to the ECB.
New ‘short-term approach’ stats
The ECB already collects data on pension funds, but this is done under a “short-term approach” that relies on existing data sources, mostly supervisory authorities, rather than requiring pension funds themselves to report data directly.
On Tuesday it released new statistics on pension fund and insurance company assets and liabilities. They show the sectors separately and in more detail, with the ECB saying they result from “enhanced data collecting frameworks”.
The ECB is planning to add more granular data in 2017, and publish information on a “more timely” basis than before.
It said the new statistics replaced non-harmonised euro area pension fund statistics that it previously published.
The statistics can be found here.