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EIOPA starts consultation process on 'holistic balance sheet' study

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  • EIOPA starts consultation process on 'holistic balance sheet' study

EUROPE - The European Insurance and Occupational Pensions Authority (EIOPA) has launched a consultation on the quantitative impact study (QIS) for the 'holistic balance sheet' (HBS) approach, stressing that it would assess only the financial impact such measures would have on IORPs.

In a new paper on the technical specifications for the study, EIOPA said the consultation aimed to help IORPs perform the necessary calculations in the event that an HBS approach were to be implemented within the revised IORP Directive.

EIOPA said it had paid "particular attention" to the valuation and risk-mitigating effect on solvency capital requirements with regards to pension funds' adjustment and security mechanisms, including conditional and discretionary benefits, last-resort reductions of benefits, sponsor support and pension protection schemes.

As a first step, IORPs participating in the QIS exercise will be asked to perform the valuation of the various components of the HBS.

In a second phase, those same IORPs will be required to perform the calculation of the solvency capital requirement.

EIOPA said the QIS would not assess the HBS's impact on "scope and definitions, the role of the supervisor, governance or disclosure to plan members".

Additionally, IORPs providing only "pure" defined contribution schemes will not be included in the exercise.

The authority stressed that the technical specifications should be considered as a "work in progress", meaning they might be subject to "deletions, elaborations and improvements".

The consultation paper is a first step towards the actual QIS exercise. Following the public consultation process - which will end on 31 July - EIOPA will then review all the responses provided by the industry and forward them to the European Commission.

The Commission will, in turn, have to approve EIOPA's methodology before the authority can launch the formal QIS.

The QIS exercise is expected to take place from the beginning of October until mid-December 2012.

In a previous interview with IPE, a spokeswoman for EIOPA said the consultation paper on the QIS would be sent to all interested parties, including academics, industry representatives and supervisory authorities across all European member states.

"Some member states that are not part of the European Union and act as observers, such as Liechtenstein and Norway, might also give their input on the methodology used by EIOPA to implement the holistic balance sheet proposal, if necessary," she added.

Following criticism from the pensions industry on the "short" timetable set for the introduction of the draft revised IORP Directive, the Commission and EIOPA modified the timeline.

Earlier this month, Michel Barnier, the commissioner for the internal market, confirmed that the Commission would not publish any proposals on the revised IORP directive before next summer.

Under the plans originally set by the Commission, the European authority was expected to launch the QIS in early May, with a view to publishing its results at the end of September.

The Commission was hoping to introduce a draft version of the new Directive before the end of this year, either in November or December.

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