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In a briefing note, the consultancy points out that the consultation paper launched by the European Insurance and Occupational Pensions Authority (EIOPA) last month simply sets out the methodology and formulae for the valuation of assets and liabilities. It said the scope of the QIS – which aims to assess the potential impact the 'holistic balance sheet' (HBS) approach would have on occupational pensions if it were to be introduced into the revised IORP Directive – was too limited and failed to clarify the ramifications of such measures for pension schemes. Subsequently, trustees and employers will be no closer to knowing what to do when their balance sheets do not balance.
Punter Southall also noted that EIOPA's advice sent to the European Commission in February did not specify how the sponsor covenant or PPF should be valued. "EIOPA has had to specify an approach for the purposes of the QIS, but says the techniques specified for the QIS should not be assumed to be the ones that will be implemented in practice", it said.
It also questioned the way EIOPA was seeking to assess the valuation of the solvency capital requirement. "This calculation of the solvency capital requirement (SCR) is copied directly from the latest QIS for Solvency II with a few adjustments to reflect the nature of pension scheme liabilities", it said.
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