mast image

Special Report

Impact investing


European Commission to investigate possibility of levy to fund EIOPA

Related images

  • The European Commission

The European Commission has backed calls for the European Insurance and Occupational Pensions Authority (EIOPA) to no longer be funded from the European Union’s budget, increasing the likelihood of an industry levy.

The European executive recommended the changes as it endorsed reviews of both the European Systemic Risk Board (ESRB) and the European Supervisory Authorities (ESA) for banking, securities markets and the pension and insurance industry.

The review noted concerns that the current approach to ESA funding – whereby a budget is provided by the EU and through grants from the national regulators – could prove unsustainable as the supervisors looked to increase staffing levels.

“Given EU and national budget constraints, the Commission considers that a revision of the existing funding model should therefore be envisaged,” the review said.


It went on to note that the new model would “ideally” abolish the current funding model and that the Commission would start preparatory work to “improve the funding arrangements of the ESAs so they could fulfil their mandate”.

“Further analysis could be carried out to assess the possibility of different funding models for the ESAs, including by increasing the level of funding by raising fees and levies,” it added.

Gabriel Bernardino, chairman of EIOPA, last year called for greater funding to attract further staff, a call backed by the European Parliament’s economic and monetary affairs committee (ECON).

The Commission said that, in light of the proposed Banking Union, it would also consider either relocating the ESAs and ESRB to have a single seat.

EIOPA is currently based in Frankfurt, the European Securities and Markets Authority in Paris and the European Banking Authority in London.

The Commission said it would also consider whether a “Twin Peaks” approach to regulation should be implemented, with a single prudential regulator and a second to police the industry.

The review further suggested changes to the way ESA stakeholder groups are composed, increasing transparency and suggesting that those appointed should be chosen in a more “balanced” way – potentially by increasing the number of consumer and small and medium-sized enterprise (SME) representatives.

The 30-strong occupational pensions stakeholder group (OPSG) currently consists of 10 representatives from the pension industry, employers, employees, professional bodies, academics and a sole representative for SMEs.

The OPSG last year appointed Benne van Popta as its chairman.

Readers' comments (3)

  • There are two differences between funding by levy and funding from the EU budget.

    First, the budget is financed by all EU citizens, the levy by pension funds, therefore those saving for a pension. The higher a member-state's participation rate, the heavier the impact of the levy. However, high participation rates are supposed to be good, not punishable by tax.

    Second, the budget has an oversight process, involving member states and parliament. A levy is not restricted in any way by oversight. It is an invitation to overspend.

    Since EIOPA routinely ignores the interests of DB pensions, it would be nothing more than justice to exempt pension funds from this tax. Fat chance.

    Unsuitable or offensive? Report this comment

  • To follow up on Peter's point, why shouldn't the pension industry be made to pay for its own oversight? Levies to fund regulation are nothing new (the UK has a per-member charge to pay for TPR's budget), and as you note, right now funding comes from general taxation.

    Is it surprising that the Commission wants to move away from a general taxation model? As the industry often points out, the IORP Directive only impacts a handful of countries. Therefore you could also ask: Why should citizens in a non-DB nation pay for someone at EIOPA to conduct a DB stress test on UK funds?

    You can easily make the expenditure transparent by the ESAs needing to publish detailed work plans with cost estimates, justifying on a year-by-year basis the cost of a levy.

    Unsuitable or offensive? Report this comment

  • Very quickly: the mere fact that something has happened before doesn't make it desirable or right. We have had a world war before. It was no fun. Why should others pay? Because the Commission does not share your point of view. You can't go one way when it suits you and the other way when it's more expedient. Make a choice, then stick to it. Why should pension funds pay for their own supervision? See my arguments above, to which I would add that as long as the Commission fails to understand the difference between pension funds and insurance companies, the supervision can only be bad, if not outright inappropriate. Why should anyone pay for that?

    Unsuitable or offensive? Report this comment

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2548

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 300-400m.
    Closing date: 2019-07-30.

  • QN-2549

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 300-700m.
    Closing date: 2019-07-30.

  • QN-2550

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2551

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2552

    Asset class: Fixed Income, High Yield (Active).
    Asset region: High Yield (US).
    Size: CHF 500-600m.
    Closing date: 2019-07-29.

  • QN-2553

    Asset class: Fixed Income, High Yield (Passive or Passive Enhanced).
    Asset region: High Yield (US).
    Size: CHF 500-1'100m.
    Closing date: 2019-07-29.

  • QN-2554

    Asset class: Global Real Estate (Equity, unlisted Funds).
    Asset region: World (ex-Switzerland).
    Size: CHF 200 mn (potential for further growth).
    Closing date: 2019-08-07.

  • QN-2555

    Asset class: Real Estate.
    Asset region: European.
    Size: EUR 50 - 100 million.
    Closing date: 2019-07-22.

  • QN-2556

    Asset class: FX Hedging.
    Asset region: Global.
    Size: Mandate size of CHF 1.5 bn.
    Closing date: 2019-08-09.

  • QN-2557

    Asset class: All/large Cap Equities.
    Asset region: China A-shares.
    Size: Unit linked platform (0m USD in initial investment).
    Closing date: 2019-08-01.

Begin Your Search Here