European pensions must 'address urgently' sustainable pension promises - Bernardino
Written by Theo Andrew
The European pensions sector is “under pressure to address urgently” sustainable pensions promises, chairman of the European Insurance and Occupational Pensions Authority (EIOPA) Gabriel Bernardino has said.
Addressing the Handelsblatt Annual Conference in Berlin yesterday, 12 March 2018, Bernardino said the outlook for pensions is “anything but promising”, and reiterated the need for the successful implementation of both a Pan-European Personal Pension (PEPP) product and the IORP II Directive.
It comes after the European Commission launched an Action Plan on financing sustainable growth which included an amendment to the IORP II Directive.
Bernardino said: “There is a lot in front of us but the first step in the right direction will be the effective implementation of the IORP II Directive.
“We will continue developing regulatory work arising from IORP II requirements in areas such as information to members, governance and the evaluation of risks.
“Our goal is to ensure the smooth and consistent implementation of new requirements, provide national supervisory authorities with practical solutions, stimulating consistent, efficient and effective supervisory practices across the European Union.”
He highlighted the need to set up “cross-border IORPs” to create “economies of scale”; enabling good governance and risk management to invest in “the best interest of members and beneficiaries” as well as transparency.
Last year EIOPA published the 2017 IORP Stress Test Report, which found that DB and hybrid schemes’ shortfalls – to meet pension liabilities – on the common balance sheet were €349bn in the baseline and €702bn in the adverse scenario.
Bernardino added: “There have been a number of studies showing that in Europe, yet also in many other developed and developing countries, not just the pensions gap, but also the funding gap of pension funds, is increasing and will be hard to close.
“Recent corporate failings showed the impact on the safety of individuals’ future retirement income in case of significant underfunding of pension funds.”
Bernardino also stated that creating appropriate governance structures for defined contribution pension structures are high on its agenda for 2018.
He concluded: “Let’s be realistic. Challenges need to be faced and decisions to be taken sooner than later. Members of the schemes and beneficiaries should be entitled to receive a fair and adequate level of protection across the European Union.”