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

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    EBA Updates Lists of Entities for Use in Capital Calculations under SA

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    MAS Amends Notice on Related Party Transactions of Banks

    MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.

    April 08, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Euro Short-Term Rate

    ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.

    April 07, 2021 WebPage Regulatory News
    News

    EBA Consults on Standards Related to FRTB-SA

    EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).

    April 07, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules Related to IRB Approach for Credit Risk

    PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.

    April 07, 2021 WebPage Regulatory News
    News

    BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK

    The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks

    FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks

    OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.

    April 06, 2021 WebPage Regulatory News
    News

    EU Amends CRR and Securitization Regulation in Response to Pandemic

    To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).

    April 06, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6826