Matti Leppälä, secretary general of the lobby organisation, said while still in draft, he feared the lack of clarity in the Directive, in particular on risk evaluations, could see solvency requirements resurface. A leaked copy of the a draft IORP II Directive showed plans for a risk-evaluation framework for pension schemes. It requires schemes to produce risk evaluations immediately after any change in its risk profile, taking into account funding requirements for specific risk profiles, and a qualitative assessment of sponsor support. However, it does not provide further guidance or detail on what schemes should actually produce.
While conceding the seen version was only a draft, and the Commission may make amendments, Leppälä said some of the organisation’s members were concerned over the lack of detail in the Directive. “It leaves a lot of room for European Insurance and Occupational Pensions Authority (EIOPA) to develop the binding rules", he said. “This measure should not, and can not, lead to a risk-based solvency framework. This risk evaluation framework has to be something that does not actually necessitate having the capital requirements, in the same way as the envisaged holistic balance sheet", he added.
Leppälä stated the amount of secondary legislation to be added into the Directive by EIOPA was a main concern. “The level I [of regulation] is very open to democratic debate within the European Council, in public, and in the Parliament", he said, “but many essential rules are set in levels II and III, where it is binding legislation but really up to EIOPA to prepare it". “It is far from open and democratic", he said.
The finalised Directive is expected to be published within a month, and will include provisions for governance, transparency, long-term investing and a framework for cross-border schemes. It also expected to remove the requirement for cross-border schemes to be fully-funded.
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