02 March 2016

IPE: Germany's ABA sides with European Council on IORP II risk evaluation

Provisions for EIOPA approval of pension scheme transfers and for risk assessments to include ESG matters should be among others left out of the final version of IORP II, according to ABA, the German pension fund association.

The Parliament’s proposed version of IORP II was the last to be developed, via the Economic and Monetary Affairs Committee (ECON), which voted on it in late January. The preliminary date for the plenary of the Parliament is 10 May, according to aba. 

The association set out its main priorities for the negotiations yesterday, doing so in relation to the ECON’s proposal for the dirctive.  According to ABA, the ECON’s version of IORP II would allow for the introduction of the HBS “through the back door”. It has therefore called for the Council’s position on “risk evaluation for pensions” (REP), the term aba prefers, to be adopted. It said the ECON and Commission’s version of Article 29 (on risk assessment) were unclear and that the requirements could therefore in practice develop into the HBS, “in particular when EIOPA adds further guidelines”.

The implementation details of the risk-evaluation requirements should be left to member states, as per the Council’s text, and “there should be no room for EIOPA guidelines, which could then potentially result in a harmonised quantitative approach for the whole EU”.

The ABA’s position on the risk-evaluation requirements for IORPs is at odds with those of several, seemingly mainly UK-based responsible investment organisations, as the German association has called for the deletion of an article in the ECON proposal that recommends pension funds take into account “new or emerging risks, including risks related to climate change, use of resources, the environment, social risks and risks related to the depreciation of assets due to regulatory change”.  

Full article (IPE subscription required)

© IPE International Publishers Ltd.