GLOBAL - The Organisation for Economic Cooperation and Development (OECD) and the International Organisation of Pension Supervisors (IOPS) have today published licensing guidelines to improve the management of work-related pensions.
The OECD-IOPS Guidelines on the Licensing of Pension Entities are designed to help pension regulators and supervisors determine if pension fund management companies and trustees stand up to adequate governance structures, good management, financial security and performance and operational efficiency.
If fully implemented, the licensing regime - setting out a number of minimum requirements that pension entities should meet when applying for a license to begin operating - would "ensure that pension entities upgrade their financial, human and operational resources to the level necessary to meet the challenges of an increasingly complex financial system," the OECD commented today.
The guidelines set requirements relating to starting capital - obliging pension entities to hold a minimum amount of free, uncommitted starting capital - funding policy, risk management mechanisms, governance structure, and investment policy.
Moreover, they outline the circumstances in which a licence to operate may be withdrawn, while listing the powers that licensing authorities should have at their disposal when assessing licence applications.
Commenting on the proposals, Ambrogio Rinaldi, chairman of the OECD Working Party on Private Pensions and Pensions Director at COVIP, the Italian pension fund supervisor, said the guidelines are a step forward for "furthering international coordination among pension regulators and supervisors".
He added the regime would be respectful of differences in national approaches to pension fund regulation, but at the same time reflected the need to ensure common, basic standards among pension entities wishing to enter the industry.
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