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The member states also called for greater flexibility for cross-border pension provision and suggested paring down the previously detailed regulation for a universal pension benefit statement (PBS). The new compromise draft of the Directive was drawn up in consultation with member states by the Italian government, which currently holds the rotating presidency of the Council of the EU. The draft, discussed by member states at a meeting earlier this week, sees details of the risk evaluation for pensions (REP) significantly expanded – running nearly four pages compared with the initial draft’s one.
The new proposals outline that the REP should be undertaken at least every three years but retains wording that funds should also complete one “without delay” when the fund’s risk profile changes. It further details how the REP should contain a profile of the fund’s longevity, market, credit, liquidity and “other material” risks. However, the proposal that a qualitative assessment of climate change or resource risks should be part of the REP has been dropped, while a broader provision that all emerging risks “that could have an impact on the institution and its members and beneficiaries” has been included.
Notably, the presidency’s proposals also remove requirements that cross-border IORPs be funded “at all times” – an attempt to make cross-border provision easier, as proposed in at least one draft of IORP II prior to publication in March. Instead, the compromise draft now only requires full funding of liabilities when the cross-border activities commence, with permission for a recovery plan to be filed with the host state’s regulator in line with local requirements. Theoretically, this could allow a cross-border vehicle to be established with a limited number of members, fully funded, while allowing for the later transfer of further members.
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