UK minister criticises 'horrifying' lack of IORP impact assessment
UK - The UK pensions minister has criticised as "horrifying" the fact European Commission proposals for a revised IORP Directive have yet to undergo an impact assessment and warned that plans for Solvency II-based regulation would undermine the country's plans for 'defined ambition' schemes.
Speaking at a conference hosted by the National Association of Pension Funds, Steve Webb however, was positive about comments made by Karel van Hulle, head of the insurance and pensions unit at Directorate General Internal Markets, that any changes would not apply to accrued rights.
Speaking of the ongoing review of the IOPR Directive, he then said: "It is horrifying to think Solvency II could get so far without even a sniff of an impact assessment."
He welcomed comments made by van Hulle in front of a Work and Pensions select committee earlier this week that implied the European Commission would "consult on the scope" of any impact assessment going forward and urged them to listen to its eventual outcome.
Webb also welcomed the "suggestion" by van Hulle that any Solvency II regulations would only apply to future accrual.
"It's a better than a kick in the teeth, but only just," he said.
However, he was dismissive of how much such an allowance would benefit the industry.
"It's not going to help - it's simply going to mean there are no new accruals, and we still have a massive cost," he said.
Van Hulle's comments echo those of Jonathan Faull, director general of internal markets and services at the Commission, who had previously dismissed applying any changes to accrued rights, saying it was "financially unsustainable".
Webb said it was important the proposals went away "for good" - while acknowledging that such ideas never vanished and that "permanent vigilance" was required.
The minister further warned that imposing solvency on pensions risked undermining his plans for a new 'third-way' pension scheme - previously referred to as 'defined aspiration', with Webb now preferring the moniker 'defined ambition'.
"If I want employers both moving from DB into a risk-sharing world - particularly moving from pure DC into risk-sharing models to take on a bit of pension promise or pension guarantee - the last thing I want to see is a higher cost of doing that," he said.
Speaking prior to Webb's address, the European Insurance and Occupational Pensions Authority's Justin Wray sought to assure delegates that solvency for pensions had not been agreed on at present, arguing that the supervisor's holistic balance sheet (HBS) idea was not tantamount to solvency.
"If you want to have a common solvency standard, you obviously have to have common rules for the calculation of those components, and that is a step that can accompany the holistic balance sheet, but is not a requirement of the balance sheet idea," said Wray, head of EIOPA's policy unit.
He argued instead that the HBS simply enabled the next stage of the policy debate, even if details on its shape were still scarce.
Referring to EIOPA's recent advice to the Commission, the former head of pensions administration and governance at the UK's Pensions Regulator said advice only formed "one stage in a process".
"[The Commission] will provide a draft directive, then there will be a process in respect to the quantitative impact study," he added. "These are milestones - they are not at this point the final destination."