EIOPA Publishes Final IORP Review Advice

15 February 2012 (PLANSPONSOREurope.com) - The European Insurance and Occupational Pensions Authority (EIOPA) has proposed that qualitative requirements in such areas as governance and risk-management be modelled on Solvency II with necessary adjustments for IORPs, in its final advice on the IORP Directive Review.

In its final response to the European Commission’s Call for Advice on the review of the IORP Directive, EIOPA proposes the “holistic balance sheet”, as a way to achieve the Commission’s aim for harmonisation which it says will enable IORPs to take into account the various adjustment mechanisms (conditional indexation, reduction of accrued rights) and security mechanisms (regulatory own funds, sponsor support, pension protection funds) in an explicit way.

EIOPA further stresses the importance of a quantitative impact study (QIS) as crucial to further explore the possible impact on the financial requirements for pension funds that the holistic balance sheet and the various policy options within that approach might have. It adds it is currently preparing for a QIS exercise and aims to publish results in the second half of 2012. 

The advice also contains proposals to enhance qualitative requirements in such areas as governance and risk-management which have been modelled on Solvency II with the necessary adjustments for IORPs.  EIOPA urges the strengthening of fit and proper criteria and for a proportionate, i.e. adjusted for the nature, size and complexity of IORPs, implementation of robust internal and external controls and sound risk management frameworks. 

The document also addresses information provision and member protection, particularly in defined contribution (DC) schemes. EIOPA says information needs to be relevant, correct, understandable and not misleading and calls for the introduction of a Key Information Document for all defined contribution schemes which would allow members to have confidence in the scheme irrespective of where it is located in the EU.

Gabriel Bernardino, Chairman of EIOPA, said: “I am pleased that we have been able to make marked progress in the area of European regulation of DC schemes. At the moment, 60m people rely on DC schemes and I have no doubt that this number will continue to grow in the coming decades. However, this is not the end of the process of developing a European framework for occupational pensions, but merely the beginning.
“In particu

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