CEIOPS seeks to solve cross-border IORP conflicts
EUROPE - The Central European Insurance and Occupational Pensions Supervisors' body (CEIOPS) has attempted to tackle problems with the ‘Budapest Protocol' for IORPs cross-border regulation and unveiled proposals explaining how supervisors might communicate concerns over a cross-border pension scheme's compliance with local rules.
Details of the consultation paper no. 38 attempt to establish the rules and regulations under which pensions supervisors of Institutions of Occupational Retirement Provision should operate, and what they have to reveal to either home or local regulators when an apparent problem arises with an element of a cross-border pension plan's regulation, as well as by when.
More specifically, the 44-page document has attempted to resolve the ‘incompatible' laws problem by at least explaining how supervisors should communicate any concerns to their counterpart regulators and what IORPs need to do to meet rules or fill any gaps in meeting local supervision laws.
The proposed processes should at least improve information flow, according to Dave Roberts, senior consultant at Towers Perrin as it forms the basic framework under which supervisors must pass information to one another.
One of the key requirements it has proposed is the "harmonisation of documents used" between supervisors for information flow and record-keeping, by requiring a standardised document of some kind be adopted through which regulators can share information.
But what the document does not do, however, is sufficiently encourage supervisors to better explain what the rules might be for each member state, he argued, as many supervisory websites tend to point individuals to the original legislation upon social and labour laws are likely to be based, rather than put them into any context or simple explanation.
"The Budapest Protocol is designed to ensure there is a process by which regulators in different countries take and pass information to one another, when [pension] plans and sponsors want to get approval to operate in a different state," said Roberts.
"But the slightly disappointing thing is on the one hand [the document] addresses a situation, on the other hand we had hoped for integration of the harmonised rules. This has to have political agreement and go back to national governments, so getting the framework in place will take some time. I rather suspect what will happen is [supervisors] will not even explain what the social and labour laws are but direct people to websites of the original legislation. And this still leaves plan managers and sponsors with responsibility for ensuring they comply with rules," continued Roberts.
The document itself explains the general principles of cooperation between supervisors looking at an IORP, and the exchange of information required if authorities find there is incompatibility between legal frameworks where an IORP wishes to operate.
Similarly, it attempts to explain how complaints from members and beneficiaries must be handled by supervisors and how to decide which authority is responsible for tackling them.
Comments on the consultation must be returned to the CEIOPS secretariat by 25 June 2009.
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