{"id":265,"date":"2013-09-23T18:24:24","date_gmt":"2013-09-23T17:24:24","guid":{"rendered":"http:\/\/weknow0.co.uk\/?p=265"},"modified":"2013-09-23T18:24:24","modified_gmt":"2013-09-23T17:24:24","slug":"magical-realism-and-the-pensions-of-europe","status":"publish","type":"post","link":"https:\/\/weknow0.co.uk\/?p=265","title":{"rendered":"Magical Realism and the Pensions of Europe"},"content":{"rendered":"

\"shutterstock_154809119\"<\/a>The Wizard of EIOPA<\/a> is back. Gabriel Bernardino, the chairman of the European Insurance and Occupational Pensions Authority (EIOPA), outlined in May the powers he thought were necessary for EIOPA to enhance its role as a European Supervisory Authority for the insurance market. Insurers are currently busily opposing<\/a> such calls.<\/p>\n

On 5 September, therefore, he changed tack with a speech about pensions instead, entitled Creation of a sustainable and adequate pension system in the EU and the role of EIOPA<\/em><\/a>.<\/p>\n

\u201cThe creation of an adequate, safe and sustainable pensions system is one of the key objectives of the European Union and EIOPA is committed to contribute by all means to the development of such a system,\u201d he boomed, despite the EU\u2019s Constitutional Treaty not mentioning pensions anywhere among its objectives. He went on to state that EIOPA approved of assets and liabilities being valued on a market consistent basis. So far, so uncontroversial.<\/p>\n

But then he continued. \u201cEIOPA suggested a number of elements to reinforce the governance of IORPs: for example the performance of an own risk and solvency assessment.\u201d What? An ORSA? You mean that thing that has led the insurance industry to spend millions on consultants, conferences and which, 5 years on from when it was first mooted, is only currently fully implementable by 24% of European insurers with all of the resources available to them? (Moody\u2019s Analytics, in their July 2013 survey<\/a> of 45 European insurers, concluded that 24% of the insurers interviewed had their processes, methodologies and models in place to fulfil Pillar 2 requirements – the key one being the ORSA).<\/p>\n

He wasn\u2019t finished. EIOPA proposed to require defined contributions (DC) schemes to produce a Key Information Document (KID). This would contain \u201cinformation about the objectives and investment policies, performance, costs and charges, contribution arrangements, a risk\/reward profile and\/or the time horizon adopted for the investment policy\u201d. So, a massive amount of additional bureaucracy around the default funds in a DC scheme by the sound of it, with no appearance of understanding that members of DC schemes can choose their own investment policies, nor a word about the hottest issue in DC provision at the moment, ie the level of charges. Surely he is KIDding?<\/p>\n

Next he carried on a bit about the \u201cholistic balance sheet\u201d concept, despite it having recently been kicked into the long grass for implementation by pension schemes he clearly desperately wants to bring it back if he can, before giving his interpretation of the findings of the quantitative impact study (QIS) as part of the process to advise the European Commission on the review of the IORP Directive. This boiled down to:<\/p>\n