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Actuarial Association warns against strict cross-border funding rules

The final draft of a revised IORP Directive must ensure cross-border pension funds are not subject to a stricter funding requirements than those operating in one country, European actuaries have urged ahead of final trialogue negotiations.

The Actuarial Association of Europe (AAE) set out its views on IORP II as the European Commission, European Parliament and EU member states continued their negotiations on a final version of the law.

Many in the industry hope the talks will conclude before the end of the Dutch presidency of the Council of the EU at the end of June.

The AAE once again emphasised that any obstacles to cross-border activity should be removed and said it supported attempts by the Economic and Monetary Affairs Committee (ECON) of the European Parliament to link a cross-border fund’s recovery plan to approaches taken by individual member states.

It said: “The AAE agrees it is paramount the interests of members and beneficiaries are protected to the extent required by national social and labour law, but the Directive should not require that a higher level of security applies in a cross-border transfer.”

The AAE, however, did not agree with all the amendments proposed by ECON.

It questioned why the European Insurance and Occupational Pensions Authority (EIOPA) should be consulted about the cross-border transfer of pension fund assets, as it was difficult to see how such a transfer would cause systemic risks – one of the arguments used by parliamentarians to justify the European supervisor’s scrutiny.

It added that individual member interests were protected by the prudential regulations enforced by national regulators.

The actuarial association also questioned whether pension funds should be mandated to assess the risk of climate change to investments.

Noting the emphasis placed on environmental matters by the Commission and MEPs, the AAE said it accepted that such risks should be assessed using a routine risk-management framework.

It added, however, that sponsors and employees should be left to “discuss these matters and agree how they should be taken into account” by any IORP.

The view contrasts with the those of several charities pushing for the inclusion of environmental-risk metrics in the finalised draft of the law.

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