Statement is focussed on supervisory practices in relation to assessing IORPs’ suitability for possible cross-border operations
EIOPA has published a statement on “sound” supervisory practices for registering or authorising Institutions for Occupational Retirement Provision (IORPs), saying that, in the context of cross-border funds, divergent approaches could lead to supervisory arbitrage.
The authority said the main aim of the statement, which is addressed to national supervisors, was to ensure that pension funds operating cross-border did so “under prudent conditions”, regardless of the different authorisation or registration regimes.
It said supervisory approaches to assess if IORPs were prudentially sound enough to operate domestically and across borders were still divergent even though the supervisors in “home” Member States had been reviewing their registration and authorisation procedures with regard to new requirements in the IORP II Directive.
“Achieving supervisory convergence of the practices in relation to assessing IORPs’ suitability for possible cross-border operations seeks to avoid supervisory arbitrage and build a level-playing field across the EU conducive to an internal market for IORPs, as well as to ensure adequate protection of the members and beneficiaries,” EIOPA said.
Among other things, the supervisory statement sets out the cross-border-related elements that supervisors in home Member States should assess within the registration or authorisation process and as part of ongoing supervision.
For example, EIOPA said they should assess whether the IORP’s system of governance “includes adequate resources and expertise to monitor on-going compliance with social and labour law and to promptly review the impact of changes in [that law] on its cross-border operations”.
In IORP II-speak, the “home” Member State is the country where the cross-border pension scheme is based, while the “host” state is where the sponsor company and employees are based. EIOPA’s statement is exclusively about its expectations of home state IORP supervisors.