The UK’s National Association of Pension Funds said it was “astonishing” that EIOPA had given them just six weeks, between the middle of June and the end of July, to react to the latest stage of public consultation on its new funding standards for pension schemes. The next step in that process is now under way, a “quantitative impact study” into how the proposed new rules would affect pension schemes in practice. EIOPA wants to complete the study by mid-December, so it can present its conclusions back to the European Commission. Bernardino said the UK’s pension funds should participate in the process. He said: “Now is the time for the pension funds in all the countries to come to the table and present their numbers. It will be on a best-efforts basis. It will not be precise, but we need to have a feeling for the consequences, in order to have a sound political debate afterwards.”
Bernardino defended the timescale, saying six weeks was “sufficient” given the amount of material EIOPA has already published. It first proposed its new standards in February, including the concept known as the holistic balance sheet. This would value and take into account the support that pension funds get from their parent companies as well as industry “insurance” funds such as the UK’s Pension Protection Fund in any assessment of overall solvency. EIOPA said it would run a “quantitative impact study” on this idea, and in June asked the industry for its feedback on how this study should be designed. It was this that led to the NAPF’s “astonishment” that replies were called for by the end of July.
Bernardino said the negative reactions had surprised him, as the industry had “strongly supported” the impact study. He added: “It’s not up to EIOPA to define the timings of the policy agenda. We need to understand where we are. We are discussing the process for a level-one Directive – a principles-based Directive.”
Bernardino is adamant that transparency of funding is better than opacity, and said this is especially true during a time of financial crisis in Europe: “We don’t understand why people do not even want to do a calculation”.
Bernardino said the holistic balance sheet can accommodate... flexibility: “When you talk about what the Netherlands authorities are doing, they are applying discount rates based on the concept of extrapolation and the ultimate forward rate. This is the same concept that we use in Solvency II and which we are going to test in the impact study for pension funds.”
Full article (FN subscription required)
© Financial News
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article