The quantitative impact study (QIS) for the revision of the IORP Directive is “technically completely flawed” and “therefore provides no insights into the additional burdens for IORPs as a result of Solvency II,” the German Pension Fund Association (VFPK) has said, adding that Solvency II should not see the light of day.

The QIS study was launched by EIOPA in order to test if the Holistic Balance Sheet is a workable tool to determine the capital requirements of IORPs. However, the VFPK said that the data provide no information, because the approach of the study itself is flawed.

CEO Helmut Aden explained: “The main flaw is that Solvency II was taken as the starting point of the QIS. Outside of occupational pensions, many experts have seriously doubted the methodology of Solvency II. Many terms of the QIS were only vaguely defined. The pension funds were forced to interpret themselves how the technical specifications are to be understood. This allows for neither a merger nor a comparison of the results of the various pension funds. Insights for the industry cannot arise from this.”

Furthermore, the association criticised the complexity of carrying out the QIS and noted that a Solvency II regime is unsuitable for pension funds as they are long-term investors serving a social purpose. It also pointed out how Solvency II is harmful for the wider economy as it will force pension funds to invest in bonds and disinvest in asset classes such as equities.

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