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Speaking at the roundtable held by German think-tank Pensionsakademie, Roberto Cruccolini, adviser on economic policy issues at the German association of local and church pension schemes (AKA), said: “Initial estimates indicate that up to 30% of the annual management costs for investment, or up to 15% of the annual general administrative costs, could be incurred for implementation, depending on the institution, as well as a substantial increase in the running costs, for example for constant maintenance of IT systems, although these are hard to estimate.”
According to Cruccolini, IT systems would need to be aligned with the new ECB requirements to provide consistent transaction data on the total inventory of pension portfolios. This would mean additional programming expenses or even the purchase of new IT systems, which would lead to considerable additional costs.
Cruccolini suggested that the ECB and national central banks should make sure the additional reporting requirements were relevant in order to keep the additional costs to a minimum.
He said: “It would be desirable for the ECB to set the scope, detail, frequency, and deadlines of the future reporting requirements with care and consideration for the future reporters – i.e. the pension institutions – and to respect the proportionality principle by designating thresholds for insignificant positions and small institutions.”
Cruccolini described the requirements currently planned by the ECB as extremely problematic and of doubtful necessity.
According to Cruccolini, considerable practical problems would arise when different systems – such as pay-as-you-go or part-funded systems – were grouped together or institutions switched their system of financing. This would cast serious doubt on the value of liability data, he said.
He said a sectoral and geographic breakdown, as well as the planned fair value measurement of liabilities, would only be an additional burden since this data was not already collected or prepared in this form for supervisory purposes. Furthermore, many institutions would currently be unable to meet a seven week reporting deadline.