ECB welcomes reporting requirements under revised IORP Directive
EUROPE - Future reporting requirements for pension funds - similar to those developed under Solvency II for insurance companies - could contribute "significantly" to the information required by the European System of Central Banks (ESCB) under a 'steady-state approach', the European Central Bank (ECB) has said.
In its response to the consultation paper on the launch of the quantitative impact study (QIS) for the revised IORP Directive, the ECB's General Statistics Directorate - which compiles and publishes quarterly euro-area statistics on assets and liabilities of insurance companies and pension funds - stressed that a project to develop ESCB statistics based on the new supervisory reporting requirements under Solvency II for insurance companies was ongoing.
The Directorate went on to say that, like insurers, pension funds would be required under the revised IORP Directive to report on the outsourcing of its activities on a regular and timely basis.
This, it said, would help the ESCB to harmonise the data for pension funds across Europe and put in place a 'steady-state approach'.
The Directorate also called for separate information on defined benefit, defined contribution and hybrid pension schemes, "not only for monetary statistical purposes but also for economic analysis and financial stability purposes".
It added: "Detailed information on the assets held and liabilities issued by IORPs is essential, not only in terms of outstanding amounts at the end of a period, but also in terms of transactions that occur between two reporting periods."
Information including instrument breakdown, their original maturities and a breakdown of the geographical residency and institutional sector of the counterparts would also be required.
"Quarterly security-by-security reporting for the securities portfolio of IORPs is important in underpinning macroeconomic and macro-prudential analyses," the ECB said.
"This will enable to monitor and better interpret changes of the securities portfolio and the inter-linkages with other financial intermediaries, and will also contribute to the assessment of risks."
With regards to the HBS approach, the ECB said it would combine and value financial and contingent assets and liabilities of IORPs to take into account all economic exposures IORPs face, regardless of whether these exposures are recorded on a balance sheet in an accounting sense.
The ECB therefore suggested in its response that it would be required - for statistical purposes only - to derive from the holistic approach a "conventional" financial balance sheet, with the information provided by IORPs being "clearly" identifiable and with financial assets and liabilities classified and valued according to the new European System of Account framework.
This was put in place by the ECB in 2010 and will enter into force from 2014.
While pension funds have not opposed the reporting requirements under the revised IORP Directive, insurance companies have voiced concerns over such obligations under the Solvency II framework, arguing that they would be too costly.