The National Association of Pension Funds (NAPF) has expressed concern that the European Insurance and Occupational Pensions Authority (EIOPA) continues to work on a solvency system for pensions when there are many other pensions challenges to tackle, in its response today (Tuesday) to on Further Work on Solvency of IORPs.
Joanne Segars, Chief Executive, NAPF, commented:
“We are very disappointed that EIOPA has chosen to press ahead with this work on solvency for pensions. By pursuing the Holistic Balance Sheet project, for which it has no mandate from the European Commission and has been widely opposed, EIOPA risks being left behind at a time when the rest of the pensions world has moved on.
“There are far more pressing challenges that EIOPA should be addressing. The new European Commission is focusing on encouraging long-term investment, the proposed IORP Directive aims to strengthen governance and communications, and the industry is working hard to deliver good value and high quality pensions.
“The NAPF recognises that EIOPA has responded to previous rounds of consultation by including options for principles-based approaches and more flexible implementation at a national level, which is welcome and we hope they will listen again. There is no case for a single, pan-EU system.”
EIOPA’s consultation document identifies a number of areas where the European regulator believes further work is necessary in order to better specify or bring more clarity on some elements of the Holistic Balance Sheet, and on how it could be used in practice. One of these areas is the valuation of sponsor support. Segars comments:
“It would be a mistake to try to put a single numerical value on sponsor support, as this is a complex concept that requires a rounded assessment to ensure trustees fully understand the extent to which they can rely on the sponsor’s backing and the risks associated with it.”
The NAPF’s consultation response also argues that if EIOPA’s plans were to go ahead, they should apply to future accruals only and there should be a long transition period before any implementation, in order to mitigate the impact of the Holistic Balance Sheet-based funding system.
Segars concluded: “If EIOPA were to persuade the European Commission to go ahead with the Holistic Balance Sheet, then the best option would be to use it as a risk management tool, rather than as a new funding regime.”
Notes to editors:
The NAPF is the voice of workplace pensions in the UK. We speak for over 1,300 pension schemes that provide pensions for over 17 million people and have more than £900 billion of assets. We also have 400 members from businesses supporting the pensions sector.
We aim to help everyone get more out of their retirement savings. To do this we spread best practice among our members, challenge regulation where it adds more cost than benefit and promote policies that add value for savers.
Lucy Grubb, Head of Media and PR, NAPF, 020 7601 1726 or 07713 073023, [email protected]
Eleanor Bennett, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]