17 June 2013

AEIP publishes contribution to OECD's draft High-Level Principles of Long-Term Investment Financing by Institutional Investors

The European Association of Paritarian Institutions (AEIP) called on the OECD to recognise the role of social partners when it comes to managing long-term investments, and asked for more research on the potential impact of accounting standards and market-consistent valuation.

AEIP’s contributions to the OECD Draft Principles:

In general, the principles developed by the OECD are in line with the values and positions of AEIP. However, AEIP believes that within the draft principles the role of social partners in setting up and running pension schemes, which are in turn key players within the field of Long Term Investments, should be recognised.

Among the features a governing body of institutional investors should have, AEIP believes that representativeness of those who are involved in the scheme (such as employers and employees) should be welcome. Of course, they should contribute to the right mix of skills. While this is not possible for insurance companies, it is certainly a feature of many pension schemes in the world.

While transparency and accuracy of valuation methods for long-term assets are essential to a good prudential framework, AEIP is sceptical about the possibility of having equal implementation of standardised methods across countries. Within the occupational pension field, standardisation might be of help for cross-border comparisons. However, it is highly risky to promote a uniform implementation of valuation methods for long-term assets while each State has its own prudential framework (the method is standard, the implementation – the setting of parameters and assumptions – can be different).

AEIP finally suggests that more study is carried out on the impact of accounting standards and market consistent valuation of assets and liabilities on Long-Term Investments.

Full contribution

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