Italian Plan Sponsors Could Face Tougher Compliance Controls Due to Formation of Superbody
16 July 2012 (PLANSPONSOREurope.com) – Italian plan sponsors may incur greater costs due to greater compliance demands brought about by the formation of a new supervising body for both insurance companies and pension funds, Jeffrey Greenbaum, Partner at Hogan Lovells has told PLANSPONSOR Europe.
Last week Italy’s Ministry of Finance announced that under spending review reforms it has abolished the COVIP (the Italian supervisory Authority of pension funds) and ISVAP (the Italian supervisory Authority for insurance companies). The two bodies will be replaced by a new single Authority, "IVARP", for insurance and pension savings (Istituto per la vigilanza sulle assicurazioni e sul risparmio previdenziale). The new Authority will be closely tied with the Bank of Italy to ensure a coordinated supervision.
With regard to pension savings, IVARP will for the most part perform all the functions previously entrusted to COVIP. The principal exception is the supervision on investments and composition of the portfolio of Casse di Previdenza, which recently passed to COVIP and now is transferred back to the Ministry of Employment and Social Policies (Ministero del Lavoro e delle Politiche Sociali). The Decree, however, envisages, among other things, the possibility for IVARP and the Ministry of Employment to agree on the supervision over the Casse di Previdenza.
Greenbaum, told PLANSPONSOR Europe: “The regulators will believe they are ensuring that all investment vehicles have the same stringent protections/internal structures necessary and appropriate for the related investors. This may result in greater costs for the pension funds and Casse.
“While it is prematurely to say something in depth regarding the impact of the transfer of COVIP's powers to IVARP, it might be prudent to expect a rationalisation and an increase of supervision activity by the new authority (IVARP) as well as the need for pension funds to enhance on-going compliance controls.”