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EIOPA investment-statement review raises harmonisation concerns

EIOPA’s peer review of pension funds’ statements of investment-policy principles provides valuable analysis and recommendations but should not lead to greater harmonisation under IORP II, the secretary general of PensionsEurope told IPE.

The European Insurance and Occupational Pensions Authority (EIOPA) last week announced the results of its peer review of pension funds’ statement of investment-policy principles (SIPP).

These became a requirement under the original Directive for Institutions for Occupational Retirement Provision (IORPs), with the recently updated IORP Directive (IORP II) adding disclosure requirements and a requirement for the SIPP to explain how environmental, social and governance (ESG) considerations are taken into account.

EIOPA found that the statements were primarily used as a supervisory tool by national competent authorities (NCAs) – supervisors, essentially – and said they were key to monitoring the suitability of an IORP’s investment policy and proper risk management.

It said the content of the statements “varies between member states and is based on national measures, which the majority of member states have implemented in supplement to the requirements of the IORP Directive”.

The supervisory authority’s peer review also identified best practices for supervision and recommended three actions for NCAs, “with the aim to ease the burden on IORPs”.

Gabriel Bernardino, chairman at EIOPA, said: “The diverse application of the Statement of Investment Policy Principles in the conduct of supervision across Europe confirms the need of achieving greater supervisory convergence in the European Union already in the early stage of implementing the IORP II Directive for the benefit of the European pension scheme members and beneficiaries.”

Matti Leppälä, secretary general of PensionsEurope, told IPE there were a lot of positives about EIOPA’s peer review, but he argued that it should not be allowed to drive harmonisation of practices across the EU.

“It makes sense that EIOPA is looking into this process – how the SIPP is used, how it is produced – and there are a lot of sensible, valuable things in the peer-review report,” he said.

“People should be open to proposals for improvement, but it is another thing to have it imposed on you because that comes with costs and other things that the pension funds are concerned about.”

He pointed out that there are no delegated acts in IORP II and that EIOPA therefore lacks the power to develop the supervisory convergence it has been pushing for with respect to occupational pension funds.

He said it was down to member states to implement the requirement for a SIPP, which looks set to be regulated under Article 30 of the new IORP Directive, and that “too much harmonisation” should be avoided.

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