EUROPE - Chris Verhaegen, secretary-general of the European Federation of Pension Funds, has praised the reaction of European regulatory supervisors as playing a key role in the assistance of pension funds during the recent financial crisis.
Verhaegen made her comments ahead of this year's IPE Awards in Dublin, for which she is again nominated for the Outstanding Industry Contribution Award.
She acknowledged that both pension fund executives and regulators have had to adapt to the pressure of falling markets on long-term assets and liabilities, but the combination of strong pensions governance and intelligent reaction has reinforced the strength of the European pensions system.
"The financial crisis means how pension funds have dealt with the crisis has changed, but they have finally weathered the storm," said Verhaegen. "There is a need for a longer recovery period than under normal circumstances, but the system has proved to be robust. And there are responsible investment policies within pension funds."
She continued: "The beginning of the year, when stock markets fell, was really frightening for everyone in the pensions market. But the actions taken by supervisors, granting longer recovery periods and requiring more information, means security has increased a lot as a result of the financial crisis."
While home state supervisors have worked to support pension funds manage the difficult circumstances of the global downturn, Verhaegen believes there is still more that the European Commission could do to assist pension funds further.
In particular, the EFRP would like to see EC officials rethink some of the proposals set out in the Alternative Investment Fund Managers (AIFM) Directive, which could significantly hamper pension fund growth.
"We have seen many of the major pension funds say they are very worried about the impact of the AIFM Directive proposals on hedge funds and alternatives in general. It will restrict the investment options in some big institutions," she suggested.
There has been some welcome reprieve during recent pressures, however, as the IORP Directive, which is key to the development of cross-border pension funds, has been left untouched by the EC Internal Markets Directorate rather than reviewed and rethought, noted Verhaegen.
"What has been important for the pension funds is, for the time being, there is no change to the IORP Directive. There was pressure for EC officials to do so. But we are at the end of the year and there are no proposals, which is very good for pension funds who continue to work on the framework of the IORP. Implementation has not been sufficiently well-deployed until now."
She added: " This dynamic between IORPs should not be connected to the solvency of an insurance-based system, it should be disconnected. And it should continue like that."
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