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Germany's aba questions legality of EIOPA stress tests [updated]

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The European Insurance and Occupational Pensions Authority (EIOPA) has no legal mandate to conduct its forthcoming stress tests for pension funds and should be challenged, according to Germany’s pension association (aba).

Heribert Karch, chairman at the aba, questioned why EIOPA was still proceeding with the stress test, with a consultation due on 11 May, even after the European Commission gave repeated assurances that it would not attempt to introduce regulations akin to Solvency II “through the back door”.

Speaking at the association’s annual conference in Berlin, Karch argued that the shadow of former internal markets commissioner Michel Barnier, who stepped down last December and was replaced by Jonathan Hill as commissioner for financial stability, still loomed large over the pensions industry.

“EIOPA has no legal basis for the new phase of stress tests,” he told delegates. “And, if that is true, and we all know how counter-productive the introduction of [a holistic balance sheet] regulation would be, then maybe we should re-examine the evidence.

“The European Commission’s thoughts have moved on, and EIOPA continues, with a mandate it granted itself, the job begun by commissioner Barnier.

“Ladies and gentleman, how can this be true? I have to ask: How long will we continue to put up with this?”

Karch added that he was in “intensive talks” with his Dutch colleagues about the matter and drafting a letter to the German Federal Finance Ministry that would be co-signed by the German employers association BDA.

The Dutch Pensions Federation confirmed it was holding talks with the aba on the matter.

EIOPA chairman Gabriel Bernardino has previously defended the stress tests, telling a conference organised by the UK’s National Association of Pension Funds that it would not copy the model applied to the insurance sector.

At the time, he also emphasised that it was important for the regulator to assess how financial shocks are transmitted through the markets, something it cannot monitor at present.

“We do not want to start the thinking with the opinion that big pension funds are systemically important – this is not our starting point,” Bernardino said.

“We want to understand the market better and how the linkages are.”

However, the European industry has taken a dim view of the project since it was confirmed last summer, warning of “new and unnecessary burdens” for pension funds.

Readers' comments (1)

  • A pity that the Dutch Pension federation has declined comment as I think it is important for the dutch pension community to have a view. Particularly in a time where The Netherlands is reshaping its pension landscape.

    I think Dutch pension funds have little to gain with EIOPA, rather the contrary. Or am I overlooking some major advantages?

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