The aba, Germany’s occupational pension fund association, has welcomed new proposals for a revised IORP Directive that “will not include any solvency requirements based on the holistic balance sheet (HBS) approach”, even though regulators recently stressed that the HBS was not a “dead-end street”.
In a position paper regarding the European Commission’s legislative proposal for the revised IORP Directive, expected some time this autumn, the German association said the HBS approach was an “inadequate copy-and-paste exercise” from the Solvency II framework for insurers.
“The aba calls for the creation of a separate and appropriate supervisory regime for IORPs, which is financially viable and properly takes into account the special characteristics of IORPs,” it said.
The association also argued that employers and employees have to commit themselves for several decades under an occupational pension plan, which means “reliable labour, tax and prudential law and regulations are therefore of utmost importance”.
It added: “The discussion regarding an application of Solvency II-style capital requirements to IORPs, which we have had for several years now, has led to uncertainties for employers, which, as a consequence, have halted any further developments.
“In other words, initiatives to create new IORPs or develop existing ones further are on hold – a situation that has to end.”
It said IORP II should not have the character of a “transitory” directive, where it is already clear today that another review will be needed soon.
In May, Michel Barnier, EU commissioner for internal market and services, announced that the Commission would postpone the introduction of pillar one of the IORP II Directive, which focuses on capital requirements.
At the time, Barnier said solvency rules should be an “improvement for the pensions sector, rather than a punishment”.
He added that the quantitative rules would be a job for his successor, after a new group of commissioners takes over next year, and that, in the meantime, the Commission would release a legislative proposal for pillars two and three of the same directive this autumn.
However, the European Insurance and Occupational Pensions Authority (EIOPA) – which was in charge of conducting the first quantitative impact study (QIS) for the revised directive that aimed to assess the feasibility of introducing an HBS approach – recently pointed out that the HBS was not “a dead-end street”.
At a closed-door event in Brussels in July, EIOPA chair Gabriel Bernardino said in his opening remarks that the HBS was a way to capture “the wide variety of occupational pension systems in the different member states in a single, European prudential regime”.
He added that the approach would not interfere with national social or labour laws, or with the prerogative of employers or social partners to decide on the contents of pension funds.
A source close to the matter told IPE at the time that Bernardino was also questioned that day on the wisdom of continuing to work on capital adequacy now that the Commission had postponed the inclusion of the first pillar in the revised directive.
In response, Bernardino confirmed that the regulation that founded EIOPA gave it the power to advise on measures to ensure the sustainability of pension funds.