Featured Product

    EIOPA Publishes Opinions on Implementation of IORP II Directive

    July 10, 2019

    EIOPA published four opinions to assist national competent authorities in the implementation of the Institutions for Occupational Retirement Provisions (IORP) II Directive. The topics addressed in the opinions are the use of governance and risk assessment documents in the supervision of IORPs, the practical implementation of the common framework for risk assessment and transparency for IORPs, and the supervision of the management of operational risks as well as the environmental, social, and governance (ESG) risks faced by IORPs. Two years after the publication of these opinions, EIOPA will look into the supervisory practices of the competent authorities with a view to evaluate supervisory convergence.

    The opinion on the use of governance and risk assessment documents in the supervision of IORPs sets out expectations of EIOPA on minimum information content to describe how pension funds conduct their own-risk assessment and present results from their own-risk assessment. National competent authorities should review and ensure that the own-risk assessment is forward-looking, considering internal and external emerging developments likely to affect the future risk profile of pension funds. Annex 1 to this opinion provides guidance for competent authorities on the use of relevant governance documents in the supervision of IORPs’ investment policy. Annex 2 provides guidance for the competent authorities on IORPs’ own-risk assessment. Annex 3 provides an overview of the risk management rules within the system of governance in the IORP II Directive. Annex 4 provides an illustrative template for the voluntary use by competent authorities and IORPs.

    The opinion on the practical implementation of the common framework for risk assessment and transparency for IORPs encourages national competent authorities to make IORPs aware of the availability of the common framework as a tool for risk assessment and to stand ready to support pension funds in the application of the tool. Annex 1 contains principles and technical specifications for IORPs to value the common framework’s balance sheet and perform the standardized risk assessment (SRA) calculations. The opinion is also accompanied by a calculation spreadsheet to assist IORPs in calculating, including through the provided simplifications, and aggregating the SRA (sub-)modules.

    The opinion on the supervision of the management of operational risks faced by IORPs stresses the importance of forward-looking supervision. With the shift away from defined benefit pensions and the emergence of multi-sponsor IORP providers, national competent authorities should increasingly pay attention to pension funds' future viability and operational liabilities of defined contribution schemes. Although new market and regulatory developments should generally improve occupational pensions, they may also lead to greater complexity in retaining supervisory oversight of the full range of activities performed by pension funds or outsourced to service providers. Furthermore, the rapid evolution and transmissibility of cyber threats necessitate a forward-looking and cross-sectoral approach to the supervision of cyber risk faced by pension funds.

    The opinion on the supervision of the management of ESG risks faced by IORPs provides an illustrative mapping of how ESG risks may arise in traditional prudential risks. As institutions tasked with a social purpose of providing retirement benefits, European pension funds should be exemplary leaders of responsible ownership. Thus, national competent authorities should encourage pension funds to consider the impact of their long-term investment decisions and activities on ESG factors through their stewardship role, as well as having regard to the impact of sustainability risks on pension fund liabilities. 

     

    Related Links

    Keywords: Europe, EU, Insurance, IORP II Directive, IORPs, Opinion, Governance, Risk Assessment, Operational Risk, ESG, Own-Risk Assessment, EIOPA

    Related Articles
    News

    HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration

    The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.

    July 29, 2021 WebPage Regulatory News
    News

    EBA Guide to Monitor Threshold for Intermediate Parent Undertakings

    The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).

    July 28, 2021 WebPage Regulatory News
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    ESMA Group Issues Recommendations on RFR Switch in Interdealer Market

    The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.

    July 26, 2021 WebPage Regulatory News
    News

    ECB Study Assesses Impact of Basel III Finalization Package

    The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.

    July 26, 2021 WebPage Regulatory News
    News

    ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading

    The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.

    July 26, 2021 WebPage Regulatory News
    News

    PRA Updates Remuneration Policy Statement Templates and Tables

    The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.

    July 26, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7307