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It is PensionsEurope ́s view that the very low counterparty risk of Institutions for Occupational Retirement Provisions (IORPs), the way they use derivatives to mitigate financial risk (as opposed to speculative purposes) as well as the significant impact that the proposed Draft RTS would have on IORPs, regardless of their size, should be more adequately addressed. Indeed, the Draft RTS, as they currently stand, would impose important burdens/costs for IORPs and their assets managers, which would inevitably have a negative impact on the retirement benefit of future pensioners. IORPs and their dedicated asset managers would have less available resources to capitalise long-term investments in Europe.
The European Parliament and Council agreed to grant in EMIR a temporary exemption from the clearing obligation to IORPs and financial institutions managing assets on their behalf. This exemption was established in recognition of the specific features of IORPs and the materially adverse effects that the new legislation would have on them and on pension beneficiaries.
Requiring IORPS and their asset managers to post Initial Margin (IM), as opposed to the current practice, would create significant costs for IORPS and their beneficiaries and would therefore be against the rationale of such exemption since it would render it completely otiose. PensionsEurope supports the large list of eligible collateral recognised on the Draft RTS. However, PE deeply regret the fact that IORPs and there asset managers would be penalised for using external credit ratings to assess the credit quality of collateral. The proposed concentration limits on government bonds would also be very burdensome for IORPs, since they are a key investment tool for them.