mast image

Special Report

Impact investing

Sections

IORP framework could impinge on social partner agreements – EFRP

Related images

  • IORP framework could impinge on social partner agreements – EFRP

EUROPE - Brussels could be acting outside its remit and intruding on the social contract by weighing in on the issue of pension promises and collective bargaining, according to EFRP secretary general Matti Leppälä, speaking in the September issue of IPE magazine.

In the interview, Leppälä suggested the European Commission could be overstepping the mark by trying to impose its interpretation of 'regulatory certainty' on promises that arise from collective bargaining.

He argued that the valuation of pension promises using a 99.5% level of confidence based on a value-at-risk framework should remain with the social partners.

But he also warned that the framework currently on the table could instead mean the Commission is looking to oversee those agreements.

In its consultation paper, the European Insurance and Occupational Pensions Authority (EIOPA) stipulates that occupational pensions taking part in the 'holistic balance sheet' quantitative impact study will need to calculate their solvency capital requirements, which set out the risks that should be considered by IORPs.

The authority also points out that the stresses and correlations relating to the risks are based on the most recent estimates for Solvency II, which uses a confidence level of 99.5%.

But Leppälä argued that the EFRP's members believed the pension promise could change - "not in all countries in the same way, but, in many countries, they are the result of collective bargaining or agreement between social partners and can be adapted".

He insisted that such agreements did not fall within the Commission's scope.

"If the social partners consider workplace pensions to be part of salary, it should be for them to agree if they wish to have a more flexible promise," he told IPE.

He also argued that the consultation process on the quantitative impact study for the revised IORP Directive should have been better prepared.

But he did acknowledge that it had been difficult for EIOPA to work on the IORP regulatory framework due to the tight deadline imposed by the Commission. 

He also conceded that the authority had been given a very challenging task in having to come up with a totally different framework for occupational pensions, when the framework was essentially based on Basel III and Solvency II.

For more on Matti Leppälä's interview with IPE, please see the September issue of the magazine.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2548

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 300-400m.
    Closing date: 2019-07-30.

  • QN-2549

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 300-700m.
    Closing date: 2019-07-30.

  • QN-2550

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2551

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2552

    Asset class: Fixed Income, High Yield (Active).
    Asset region: High Yield (US).
    Size: CHF 500-600m.
    Closing date: 2019-07-29.

  • QN-2553

    Asset class: Fixed Income, High Yield (Passive or Passive Enhanced).
    Asset region: High Yield (US).
    Size: CHF 500-1'100m.
    Closing date: 2019-07-29.

  • QN-2554

    Asset class: Global Real Estate (Equity, unlisted Funds).
    Asset region: World (ex-Switzerland).
    Size: CHF 200 mn (potential for further growth).
    Closing date: 2019-08-07.

  • QN-2555

    Asset class: Real Estate.
    Asset region: European.
    Size: EUR 50 - 100 million.
    Closing date: 2019-07-22.

  • QN-2556

    Asset class: FX Hedging.
    Asset region: Global.
    Size: Mandate size of CHF 1.5 bn.
    Closing date: 2019-08-09.

  • QN-2557

    Asset class: All/large Cap Equities.
    Asset region: China A-shares.
    Size: Unit linked platform (0m USD in initial investment).
    Closing date: 2019-08-01.

Begin Your Search Here
<