European Pensions Supervisor Eyes Larger Role

 (November 21, 2012) — The chairman of the body responsible for supervising European pension funds and insurance companies has revealed plans for the group to become more powerful on the continental scene.

Gabriel Bernardino told attendees at the European Insurance and Occupational Pensions Authority (EIOPA) second annual conference in Frankfurt, Germany, today that the organisation’s remit should be expanded.

“In the pensions area EIOPA’s mandate only covers occupational pensions, the so-called second pillar. However, I believe that the implementation of the European Union agenda for adequate, safe and sustainable pensions calls for a sufficient level of regulation and supervision of personal pensions, the so called third pillar. Consequently, EIOPA’s mandate should be extended to all third pillar pensions,” Bernardino said.

He admitted that in the short term EIOPA already had a lot of work to do, examining how Solvency II regulations should be applied to pension funds and insurance companies, and assessing potential threats to the stability of the financial system.

However, he added that even to comply with its original remit would mean enlarging the organisation and its right of entry to relevant parties.

“In order to perform this independent assessment in a transparent, efficient and risk-based way, EIOPA needs to reinforce its human resources, should have access to the relevant individual information available to the national supervisors and also have direct access to the individual institutions,” he said.

The bulk of the chairman’s speech dealt with issues around Solvency II, for both insurance companies and pension funds.

Bernardino said the organisation was creating a “supervisory handbook” to help those affected by the regulation to be clear on best practice in implementing it.

He slammed European regulators for postponing the launch of the regulation earlier this year: “Solvency II has been viewed internationally as a reference in risk-based regulation of insurance. In that sense many countries have considered elements from Solvency II while developing their own regimes. The lack of certainty about Solvency II implementation is challenging the EU credibility in the international discussions.”

Bernardino also sought to pacify qualms about the implementation of Solvency II on pension funds, telling conference attendees that EIOPA was hard at work with a Quantitative Impact Survey (QIS).

“The QIS exercise aims to assess the financial impact on institutions for occupational retirement provision (IORPs) of valuing assets and liabilities in the holistic balance sheet and introducing a solvency capital requirement under various policy options of the EIOPA’s Advice. We expect to finalize the report on the QIS findings in spring 2013.”

The chairman signed off thus: “As Bob Dylan so nicely [sang]: The times they are a’changin’.”

For the full speech, click here.