2011 proved to be a relatively hectic year for the European Insurance and Occupational Pensions Authority (EIOPA), established on 1st January as a result of reforms to the structure of financial supervision in the European Union initiated by the European Commission (EC). The EIOPA was formed with the aim of ensuring a strong degree of harmonisation and application of rules for financial institutions and markets across the European Union. It was also announced that the supervision of cross-border groups would firmly be on their agenda.

At the beginning of the year it announced its acting chairperson and announced the main composition of its management board and also published three reports in July related to its work on occupational pensions. It also launched a consultation in a response to the European Commission’s request to advise them on the future of the Institutions for Occupational Retirement Provision (IORP) Directive. EIOPA was expected to advise the EC by mid-December on this issue but the deadline has since been extended to January 2012.

In January it was announced that EIOPA’s board would consist of six representatives of national supervisory authorities of European member states, one representative from the EC and also Victor Rod, director of the Commissariat aux Assurances in Luxembourg as acting chairperson. At the time acting secretary general Carlos Montalvo, who later became executive director, stated that the EIOPA would look to coordinate its governance and policies with European national regulators. Gabriel Bernardino was appointed as the authority’s first chairman.

July saw EIOPA fully involved in dealing with the risks that members of defined contribution schemes faced throughout the year and also the growth in the number of cross-border IORPs. It published two reports entitled Report on Risks Related to Defined Contribution Pension Plan Members and a Report on Risk Mitigation Mechanisms for Defined Contribution Related Risks dealing with these issues.

Concerning the IORP directive, which looks to ensure financial protection for future pensioners and to establish appropriate investment strategies for each individual pension fund, EIOPA drafted four options to outline the future of this directive. In its first response, EIOPA said that it would be possible to leave the general policies of the directive unchanged although many pension funds would run the risk of falling outside its scope. In its second response to the EC, EIOPA stated that the current definition applied to an occupational pension scheme should be clarified so that any scheme outside the IORP’s scope could potentially be considered if they met the required framework as to what an occupational pension scheme is. The fourth option proposed to extend the IORP directive to all providers of occupational operating at their own risk.

Greater clarification of the different types of pension scheme across the EU was supported by the NAPF. In August it stated that the “EIOPA or the EC should draw up a clear classification of the different types of pension scheme across the EU. This would provide a stronger foundation for future policy making.”

In August, Aon Hewitt also urged EIOPA to work on the simplification of the framework to set up a cross border pension plan. It encouraged EIOPA to review the legal, regulatory and administrative elements of setting up a cross border pension to facilitate the process.

A 517 page consultation document was published in October by EIOPA calling for a ‘holistic balance sheet’ in order to ensure a harmonised system of pension funding across Europe with liabilities calculated on a conservative basis, balanced by a mixture of assets and compensation schemes.

With the consultation process surrounding the IORP directive and cross-border pension provision having been extended to January 2012, it is hard to predict what changes the EC will make to the structure of IORPs but it is likely that both authorities will continue to work on a simplification of the current system and apply rules and regulations to ensure the smooth running of occupational pension schemes across Europe.

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