20/01/2012
By Matt Ritchie
Proposals to apply a Solvency II-type regime to occupational pensions have been firmly rejected by the European Association of Paritarian Institutions (AEIP).
The association has set out its position in its response to the European Insurance and Occupational Pension Authority’s consultation on the review of the Institutions for Occupational Retirement Provision (IORP) directive.
In a statement, AEIP said the basis for the review of the directive should be the IORP directive itself and the different reports published by the now disestablished Committee of European Insurance and Occupational Pensions Supervisors. It was not appropriate to use Solvency II as a starting point, AEIP said.
“The goal of the regulation should instead consist in facilitating the existence of good pension schemes for the European workers and citizens,” the association said.
Applying a Solvency II approach could also have consequences that would go “well beyond” pension benefits.
“The de-risking that is a consequence of the market value approach will have impacts on the capital markets. Who will be left to take long-term commitments? Who will be left to finance illiquid assets? The proposed changes will have macro-economic impacts on employment and growth.”
AEIP also backed a ‘holistic’ rather than the ‘holistic balance sheet’ approach.
“Finally, AEIP is convinced that the weak success of cross border pensions is not a sufficient justification for such a deep review of the content of the IORP directive. The barriers for the setup of a cross border activity are not only of prudential nature. They have to deal also with tax issues, resistance of local stakeholders and costs for managing a complex legal environment,” the association said.
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