EUROPE - Experts from the pensions industry have insisted that the European Commission must focus less on the place of Solvency II within a revised Institutions for Occupational Pensions (IORP) directive, arguing that insurers and pension funds did not carry the same risks.
Speaking at a public hearing on the directive held by the European Commission in Brussels today, pension fund associations and pension plan sponsors reiterated their view that a solvency framework should not be included in the revised directive - with the European Insurance and Occupational Pensions Authority (EIOPA) recently submitting its advice on the issue to the Commission, following a two month Call for Advice.
During a debate on how the IORP directive would contribute towards solving the EU pension challenge, a representative of German chemical giant BASF asked panellists if the Commission had not already decided to apply certain measures, regardless of consultation outcome.
"Why do we hear so often from the Commission that there is no intention to 'copy and paste' Solvency II, while in EIOPA's advice sent to the EC last week, this option is still open?," he asked.
Panel chair Nadia Calviño, deputy director general at the internal market and services commission, responded by saying that it would not be appropriate for the Commission to launch the review without addressing those particular points of Solvency II.
But UK MEP Sharon Bowles, chair of the European Parliament's Economic and Monetary Affairs Committee, in turn argued that comparing IORPs to insurance companies was unfair.
"Insurance contracts have different liabilities while pension funds have the same type of risk," she said. "So contrary to insurance companies, pension funds do not get contaminated by 'other' types of risk."
Bowles comments echo those of fellow UK Liberal Democrat Steve Webb. The country's pension minister had previously said he was "gravely concerned" about solvency proposals.
However, others speakers believed that Solvency II measures within a revised directive - adjusted to suit IORPs - could increase transparency for the governance of European pension funds.
Benoît de la Chapelle Bozot, an adviser on fiscal and monetary policy at the Direction Générale du Trésor insisted that solvency rules apply for insurers and pension funds in order to protect pension plan members.
"Even though the Solvency II framework should be improved, it still proposes an interesting risk approach, and the revised IORP directive should find its inspiration in that particular regulation," he said.
"Regarding the second and third pillars of Solvency II, which focus on the governance and information, why should pension funds have inferior governance tools?"
However, De la Chapelle Bezot pointed out that long-term investments played a crucial role in economic growth and argued that only "comparable" solvency frameworks should therefore be implemented.
The French Treasury was one of the few government departments to support the introduction of Solvency II in submissions made to EIOPA.
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