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CEIOPS sees pension schemes under Solvency II

EUROPE – The European Commission’s so-called Solvency II project on insurance solvency is likely to extend to occupational pension schemes, the chairman of an EU insurance and pension committee has said.

“As the solvency requirements of occupational pension funds according to the IORP directive are linked to the solvency requirements of life insurers, I anticipate that occupational pension funds eventually will be covered by Solvency II,” said Henrik Bjerre-Nielsen of the Committee of European and Insurance and Occupational Pension Supervisors, or CEIOPS.

“If not, the political level may need to explain to the beneficiaries from occupational pension funds why they should accept a potentially higher expected shortfall than policy-holders in insurance companies.” Bjerre-Nielsen was speaking at the annual conference of the German insurance association in Berlin earlier this month.

The committee had said in March that it was worried that the issue of whether pension funds would be included in a proposed solvency rules would “not be efficiently discussed”.

It said: We fear that some important policy issues (such as the scope of application of the regulation, the level of harmonisation desired ... etc) will not be efficiently discussed.” In a clarifying footnote, it said: “Will the new regulation be adapted to small insurance companies, to reinsurers, other players (e.g. pension funds)?”

Solvency II is a review of the EU insurance industry which aims to establish a solvency system that is better matched to the true risks of an insurance company. It will initially cover all types of insurers – though not occupational pension schemes.

The Commission’s Internal Market directorate general said in July that the solvency requirements for IORPs were “linked to those of life insurance undertakings by way of article 17” of the IORP directive – ‘regulatory own funds’.

“However, solvency requirements for IORPs are an important and separate subject that should be addressed at a later stage.”

Bjerre-Nielsen added that implementing the directive on Institutions for Occupational Retirement Provision – the pension directive – “may already be quite demanding in some member states”.

“In CEIOPS we contribute to the implementation process through our working group on occupational pension funds.”

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