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The decision on whether or not to apply Solvency II requirements to pension funds will be a political one as there are “no technical arguments” against such a step, said Harald Gössl from the Pensionskassen department at the Austrian financial supervisor FMA.
The European Union is currently implementing an EU-wide supervision for insurance companies and is still discussing its possible use in the retirement sector.
“There is no reason why similar pension vehicles should not be treated equally when it comes to supervision,” Gössl explained to IPE.
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“Solvency II might become applicable to pension funds in the long run but as this is a political decision it is hard to tell,” he noted.
“It might even be that for political reasons it is eventually decided that pension vehicles are not similar enough after all to come under one supervision directive,” Gössl added.
He said the working group of the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) is currently discussing Solvency II for pension funds awaiting a call for advice from the European Commission.
“One of the problems is how to compare different models for stress-testing pension funds – or whether they are at all comparable,” he explained.
Gössl is convinced regulators will first wait to see how Solvency II affects insurers before considering applying it to pension funds.
For Austrian Pensionskassen the new regulations would only mean little change as their minimum returns were lower than in other EU countries and therefore they required less solvency, Gössl noted.
“But it is hard to tell yet how it will affect pension funds in detail,” he added cautiously.
Various German Pensionskassen associations have harshly criticised the application of Solvency II for pension funds as they fear the financial requirements could ruin the pension vehicles.