Solvency II: Bernardino fights his corner
Pensions luminaries give new EIOPA chairman a less-than-warm welcome in Frankurt.
It was not a case of 'carry on as normal'. The head of Europe's new authority overseeing pensions and insurance was clearly taken aback by the reaction to a "normal" speech given to pension luminaries at Frankfurt.
Gabriel Bernardino, chairman at the European Insurance and Occupational Pensions Authority (EIOPA), would have thought that such an address - outlining the new body's intentions and its achievements to date - would have gone down a treat. After all, what was there to complain of?
He had clearly recognised what must be key issues to the interests of IORPs, or workplace-based pension schemes. His statement that EIOPA's position was that company employer support should be "valued as an asset" ought to have received solid acceptance, if not acclaim. And, addressing the European Federation for Retirement Provision's pension fund congress, surely he must have believed he was carrying his audience with him when he said: "We recognise that occupational pensions are different from other products".
But what he got was hostile questioning on Solvency II. The audience suggested that such rules on the allocation of capital had no place in EIOPA's 500-plus page Call for Advice consultation with stakeholders. Yet, at Frankfurt, Bernardino had not even mentioned the S2 word.
It was Joanne Segars, chief executive at the UK National Association of Pension Funds, who led the fray. Her general line concerned Solvency II's threat to company contributors in terms of cost burden. In the UK, pension schemes could face as much as a 50% hike, she claimed. The danger is that employers could simply walk away from their schemes.
This put Bernardino on the back foot, and he countered with the theme of "impact assessment" - no eventual proposal for a revised IORP directive could come without such a study, he insisted. And such an assessment would obviously have to balance all the pros and cons. According to the European Commission, these exercises measure the potential economic, social and environmental consequences of all future legislation.
Bernardino's logic should have won the audience over, particularly if mentioning that there would be additional impact studies, including check-ups on the relationships between one set of rules and another. IORP revisions could clash with Brussels' focus on boosting industry's financial strength, for example. Another possible barrier on the road to incorporating Solvency II could follow potential objections from individual commissioners. This is already occurring with the proposed reform of the audit business.
In Frankfurt, Bernardino must have had in his mind that EIOPA's Call for Advice had simply been a means of assessing the positions of stakeholders. After all, that is EIOPA's job. What he should not have been made to do is carry the can for any assumed ultimate outcome concerning IOPRs.