The EFRP voiced its concern about the proposal for a Directive ‘Solvency II’. Speaking at the European Pension Funds Congress in Frankfurt Wil Beckers, Chair of the EFRP working group shadowing the Solvency II initiative contested whether IORPs are in need of a review of their prudential framework along with insurers.
The IORP Directive already contains most of the principles now proposed for insurers under Solvency II. “The three pillar structure of Solvency II may be non-apparent but it surely is there and only needs to be uncovered,” Beckers affirmed.
Of even greater concern to EFRP is the possible deliberate extension of Solvency II rules to IORPs. Beckers cautioned that “a quantitative impact study has indicated that if Solvency II rules were to be applied to IORPs, they would have to increase assets by around 40-60 % of liabilities or, alternatively, sell off equities in order to reduce risk. “
Beckers recommended that “if we want to avoid exaggerated and simultaneous responses to market shocks, we should spread the systemic risk across sectors based on distinct solvency rules”.
Press release
© Graham Bishop
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