EIOPA will disclose the names of the participating pension funds in next year’s pension fund stress test. The European pensions regulator believes transparency about the test sample is necessary for “effective communication on the exercise”.
PensionsEurope, the representative body for European pension funds, had asked EIOPA not to do so.
In its response to the consultation of EIOPA’s Methodological Framework for Stress-Testing IORPs (Institutions for Occupational Retirement Provision), PensionsEurope had voiced objections against publication of the names of participating schemes.
In the previous stress test, conducted in 2019, EIOPA published a list of participating pension schemes. PensionsEurope, however, wanted this list to remain undisclosed for the 2022 edition.
According to PensionsEurope chief executive officer Matti Leppälä, some German company-sponsored IORPs with defined benefit (DB) arrangements were concerned by the wording of EIOPA’s press release in 2019, when it said that “market risks under the adverse scenario would lead to substantial benefit reductions and increase of sponsor support”.
However, the concerns voiced by the pension fund lobby group seem to have fallen on deaf ears with EIOPA. The final text of the methodological framework for the stress test stipulates that all participating IORPs will be identified by their names.
The decision “follows from careful weighing of several considerations”, according to EIOPA. Disclosure of the participating schemes “gives transparency about the sample and is thus conducive to the effective communication on the exercise,” the regulator noted.
“This can be weighted against the view that more IORPs might participate in an exercise – over and above the coverage criterion based on which selected IORPs are asked to participate – if their names would not be disclosed,” it said.
Simultaneously disclosing the names of participating schemes “might generate adverse selection of IORPs volunteering to participate in the exercise, namely where the national sector predominantly or on average ‘does well’ in the exercise,” it added.
EIOPA does not explicitly say why it believes the transparency case trumps the counterarguments.
A spokesperson for PensionsEurope told IPE “the disclosure decision is not a surprise to our members as it is in line with what EIOPA told PensionsEurope earlier this autumn.” But many pension funds still have a different opinion on the matter, he added.