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Pension funds at risk from onerous reporting, overregulation – APK

EUROPE - Overregulation and increasingly onerous reporting demands could lead to lower pension fund returns and reduce their ability to invest effectively, Christian Böhm, chairman at Austrian pension fund APK, has warned.

Last week, Gabriel Bernardino, president at the European Insurance and Occupational Pensions Authority (EIOPA), outlined a provisional timetable for the conduct of quantitative impact studies on its draft advice to the European Commission on a revised occupational pensions directive.

EIOPA’s board of supervisors is scheduled to decide on 13 February on a framework for a first quantitative impact study for the Commission’s ‘holistic balance sheet’ proposal.

But Böhm told IPE he was very critical of EIOPA’s plans to foist even more mandatory quantitative impact studies on Europe’s pension funds.

“I do not want to be obliged to deliver this additional data, as it would exceed our resources,” he said.

Speaking at a conference in Vienna on the current challenges facing asset managers, Böhm, who is also a member of EIOPA’s Occupational Pensions Stakeholder Group, said: “One of the major challenges currently is the regulatory environment, which is almost taking up more of our time than the markets, which should be our priority.”

Günther Herndlhofer, head of asset management at severance pay fund VBV Vorsorgekasse, conceded that rules and regulations were “essential”, but said it was important they be “in line with reality”.

He added: “Another major issue is legal certainty, which we often do not have with regulations, such as those set by the Austrian supervisor FMA, where a lot is a matter of interpretation.”

Böhm agreed the industry should “accept” an increasing focus on risk management, as this had created “added value”.

But he argued that there was currently too little interaction between asset management and risk management, with many institutional investors having one department “stepping on the accelerator while the other steps on the break at full speed”.

At the European level, he said there was a “major danger” of new regulations leading to “pro-cyclical decisions” and warned of politicians “wanting to have a say in a lot of things - even where they should not have any”.

He vowed to fight the application of Solvency II measures to pension funds, which he said would lead to severe cutbacks and guarantee withdrawals in several member states.

He also argued that the European Commission had called on banks to recapitalise themselves while at the same time cutting off potential sources of funding by forcing institutional investors to deleverage.

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