EIOPA launched its biennial stress test of the occupational pensions sector in EU. The published documents include Institutions for Occupational Retirement Provision (IORPs) stress test specifications, reporting templates, response templates, calculation tool, supporting spreadsheets, and adverse scenario for the EU-wide pension fund stress test in 2019. Participating IORPs must complete the exercise and submit results to the relevant national supervisory authority by June 19, 2019.
This exercise is expected to allow important and relevant insights into the resilience and potential vulnerabilities of the European occupational pensions sector. For the first time, a European stress test includes an assessment of Environmental, Social, and Governance (ESG) exposures.The core assessment refers to the direct impact of a stressed market scenario on the sustainability and funding of Defined Benefit pension funds and on the projected future retirement income of members of Defined Contribution (DC) pension funds. Developing further the methodologies and approaches used for previous exercises, the 2019 stress test has been complemented to assess pension funds' potential reaction to the adverse market scenario on their investment allocation, to understand better possible conjoint investment behaviors that may be relevant for the stability of the financial markets. Also, the effects of conditional cash in- and out-flows, which may mitigate or amplify the effects of the adverse market scenario on Defined Benefit pension funds, can be assessed following an enriched cash flow analysis.
For the 2019 exercise, EIOPA decided to add an analytical component to focus on pension funds' current exposures and risk management practices regarding ESG factors, which will provide a relevant starting point for ESG-related financial stability assessments of the European financial sector. Addressing stakeholder feedback, the 2019 Occupational Pensions Stress Test has been initiated on an expeditious timeline to allow pension funds significantly more time to conduct the exercise and for national competent authorities to evaluate the results. A dedicated questions & answers (Q&A) process with timely publications and a centralized validation procedure will further enhance the practicability and quality of the exercise. The results and conclusions of the stress test are expected to be published by the end of 2019.
Keywords: Europe, EU, Insurance, IORPs, Defined Benefit, Defined Contribution, Stress Testing, ESG, Occupational Pensions, EIOPA
A well-recognized researcher in the field; offers many years of experience in the real estate ﬁnance industry, and leads research efforts in expanding credit risk analytics to commercial real estate.
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
BoE updated the known issues document for the statistical reporting Forms AS and FV.
FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.
SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.
BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
EBA updated the report on the implementation of selected COVID-19 policies.
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.