Pensions Newsletter

High returns and market rebound

On the 17th January 2023, the European Insurance and Occupational Pensions Authority (EIOPA) published its Costs and Past Performance Report, which is aimed to improve transparency in the sector, facilitate comparisons between similar products and ultimately enhance the EU’s Capital Markets Union.

The report includes an overview of the returns and costs of insurance and pension products in 2021. With respect to the pension products, while challenges in collecting and comparing data persists, the available sample indicates that trends for such products are similar to the ones observed with IBIPs in the sense that schemes more exposed to market movements reported higher returns in 2021.

Moving to Close Data Gaps on Occupational Pensions

EIOPA decided on the 10th February 2023 to revise the information it receives from national supervisors on occupational pensions, amending the system that has been in place since 2018.

The new decision will be applicable as of the 1st January 2025 and will close important data gaps on emerging risks and fix inconsistences that have been reported to EIOPA over the past years.

The main changes when compared to the previous regime comprises of better proportionality measures for small occupational pension funds and the inclusion of information on:

• high-level, look-through data on all investments in investment funds (including UCITs) as well as information on derivative positions – to fully understand the risk exposures of institutions for occupational retirement provision (IORPs) and the products they invest in; and
• cross-border data – to accurately monitor cross-border relationships.

The new decision eases reporting requirements for small occupational pension funds, exempting IORPs with less than €50 million in total assets from the full set of reporting as opposed to the previous threshold of €25 million. Moreover, new data requirements on the quarterly reporting of derivatives and cash flows will only be mandatory for IORPs with more than €1 billion of assets under management.

The decision can be accessed and reviewed in more detail through here.

EIOPA consults on technical advice for the review of the IORP II Directive

On the 3rd March 2023, EIOPA launched a public consultation on draft technical advice for the review of the IORP II Directive. The draft advice is given in response to a call for advice from the European Commission. EIOPA will provide its final advice in October 2023.

The consultation covers the following areas:

• Governance and prudential standards;
• Cross-border activities and transfers;
• Information to members and beneficiaries and other business conduct requirements;
• Shift from defined benefit to defined contributions;
• Sustainability; and
• Diversity and inclusion

The draft advice set out in the consultation paper aims to ensure that the regulatory framework is updated where necessary to embrace the future such as the shift from defined benefits to defined contributions and the challenges of climate change. At the same time the draft advice aims to protect the legacy, by addressing topics like risk assessment and liquidity risks.

Stakeholders are invited to provide feedback to this consultation paper by responding to the questions in the online survey by 25 May 2023.

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