PensionsEurope commends EIOPA for responding to the concerns raised in previous rounds of consultations on solvency for IORPs as well as during the Quantitative Impact Study (QIS).
While EIOPA has invested a lot of time and efforts in the Holistic Balance Sheet (HBS), PensionsEurope does not think that the presented concept is to any degree satisfactory: the parts which are intellectually coherent are impossible for all IORPs to comply with given their limited resources (stochastic modelling that is not used by all IORPs, also some of the simplifications); where simplifications have been introduced, the appropriateness of those simplified heuristics and the chosen parameters is doubtful and thus the intended goal of comparability of results is highly questionable
Additionally, PensionsEurope expects the HBS implementation to be very costly while it is doubtful whether the potential benefits will outweigh those costs. PensionsEurope regrets that EIOPA does not consider using less complex and less costly risk management instruments such as ALM studies, stress tests, continuity analysis etc. Costs will have a negative impact on the benefits for IORP members and beneficiaries. Moreover, PensionsEurope thinks that the HBS is a very complex method – therefore very difficult to interpret and use - especially for small and medium sized IORPs.
PensionsEurope not only oppose the general idea of introducing new solvency requirements for IORPs, but also the HBS approach as proposed. It must be noted that the HBS approach does not adequately account for the social character of IORPs (as opposed to the mostly commercial character of insurance companies) and is therefore not appropriate. In other words, it neglects that the members of IORPs are protected by labour, social and co-determination law.
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