Applying Solvency II to pension funds should not be viewed as a "copy/paste exercise", said the chairman of the European Insurance and Occupational Pensions Authority (EIOPA).
Gabriel Bernardino echoed comments made in the past that elements of Solvency II could be applied to pension schemes across Europe, but went further in saying that because the original Directive was designed for insurance companies, it could not simply be applied to European retirement schemes. He highlighted differences such as the long-term commitments made by pension schemes, which are not universally replicated by insurers, as one of the issues that needed to be considered.
He said that in the case of insurance companies, the risk was transferred away from the person taking out a policy, whereas the arrangement with pension schemes was often different. "Pension funds in some countries – for example the UK – don't transfer the risk. The pension fund is a vehicle. The risk stays, basically, with the sponsor", he said, adding that it was "natural" that these differences should be taken into account.
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