AUSTRIA – A row has broken out between Austria’s Financial Markets Authority and consulting firm Mercer over the implementation of the EU occupational pension directive.
The FMA has officially rejected claims by Mercer manager Kurt Bednar that it dragged its feet in the implementation of the directive resulting in the “destruction of money” by Pensionskassen.
“Mr Bednar’s statement is totally unsubstantiated,” said an FMA press statement.
At a recent press conference, Bednar accused the FMA of missing deadlines and lax implementation of the Institutions for Occupational Retirement Provision directive.
The directive came into force on September 23. This was coupled with amendments in Austrian law (PKG Amendment), including the replacement of the existing quantitative capital investment limits with the ‘prudent person principle’.
Linked to this, Bednar was particularly critical of the lack of detailed requirements regarding the risk management process of the Pensionskassen, and the qualifications of the people working in the field of risk management.
According to the FMA, “it was neither the legislators’ objective nor the expectation of the market” that the risk management regulation would be instituted by September 23.
Instead, transitional provisions are currently in place until concrete regulations come into play on 30 September 2006. Until then, these “will ensure investment in the best interests of the beneficiaries,” said the statement.
“It was a good point by Mercer, but risk management is too important to go for a fast solution,” commented Guenther Schiendl, head of investments at €1.8bn sectoral scheme APK.
“The FMA is doing its homework, and is engaged in active communication with the pension fund industry and values their input,” he added.
“Bednar’s claim that ‘money was destroyed’ as the risk management regulation was not yet available is completely absurd,” said the FMA.
However, Bednar believes that the FMA had enough time to finalise the requirements before September 23.
The FMA has stipulated that its final risk management regulations will “raise the existing systems to a higher uniform level” rather than institute something new. This is because Pensionskassen already using several elements of risk and asset liability management.