AEIP publishes its position paper on the upcoming review of IORP II Directive
In view of the upcoming review of the IORP II Directive, on December 2022, AEIP adopted its position and invites EU stakeholders to consider the points raised, in order to ensure the proper functioning of the IORP sector and the protection of the interests of members and beneficiaries.
Overall, AEIP welcomes the initiative, nevertheless, wishes to underline that the review should:
- Remain within the scope of a minimum harmonization framework.
- Not change the funding requirements or introduce capital requirements for IORPs as the current prudential rules guarantee a high-level degree of security.
- Adopt a principle-based approach and lead to an implementation of the proportionality principle which takes into consideration the diverse landscape of IORPs.
- Underline that IORPs are inherently different from other financial market entities in the sense that IORPs are mainly ‘not-for-profit’ and employees often benefit from a mandatory affiliation to the pension scheme based on their employment relationship.
- Second pillar pension schemes often have a paritarian structure, meaning that they are set up and managed jointly by the national social partners. Paritarian pension funds in particular are set up by collective agreements and therefore by design represent the interests of members and beneficiaries.
- Include a nuanced approach to address the indicated shift from DB to DC.
- NCAs should stay independent in deciding on the supervisory policy for IORPs which remain under the national social and labour law.
- To enhance communication towards members and beneficiaries there should be more freedom for pension funds to layer the information to their members and there is the need to foster the improvement of digital tools.
- AEIP and its members fully support diversity and inclusion in the management boards. In a paritarian pension funds IORPs’ boards are appointed by different social partners and not by the IORP. A further exchange is needed to assess how this measure can best work in practice.
- In the wake of the UK LDI crisis, national supervisors should oversee whether EU IORPs with significant derivative portfolios are able to meet margin requirements.
As part of its policy activities AEIP has shared the position paper with decision-makers and EIOPA and will further engage into discussions.
To read the full AEIP position paper, please see here.