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In its response to a consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on how to measure the impact of the new rules, which aim to achieve a level playing field between insurance companies and pension schemes, the pension consultants say that the consultation, “simply asks the wrong questions. It focuses on technical calculation details, without giving due attention to high-level policies, and does not consider the effect on pension schemes of significantly increased capital requirements.” Barnett Waddingham also expressed concern that the calculations proposed would give ‘meaningless’ results. The firm also attacked the short timescale for the consultation and associated impact study. It says while the insurance industry has had a decade to develop its new Solvency II regime, pension schemes are expected to get to grips with overly complex calculations in a matter of months. Andrew Vaughan, a partner at Barnett Waddingham, said: “It’s worrying that EIOPA considers a single impact study to be enough, as pension schemes are likely to end up with Solvency II by the back door. In many areas the calculations have been copied from Solvency II without sufficient consideration for the differences between insurance companies and pension schemes. EIOPA’s timetable has been set by reference to the EC’s desire to publish a revised directive by summer 2013, but the short timescales will mean that EIOPA’s advice will not have been properly scrutinised and a flawed directive would be rushed through.” “The European Commission has not demonstrated the need for the proposed approach. We believe that the cost to small and medium-sized pension schemes of complying with the proposals will significantly outweigh any benefits in terms of improved solvency and governance. We urge EIOPA to go back to first principles and design an IORPs directive specifically for pension schemes.”
In its response to a consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on how to measure the impact of the new rules, which aim to achieve a level playing field between insurance companies and pension schemes, the pension consultants say that the consultation, “simply asks the wrong questions. It focuses on technical calculation details, without giving due attention to high-level policies, and does not consider the effect on pension schemes of significantly increased capital requirements.” Barnett Waddingham also expressed concern that the calculations proposed would give ‘meaningless’ results.
The firm also attacked the short timescale for the consultation and associated impact study. It says while the insurance industry has had a decade to develop its new Solvency II regime, pension schemes are expected to get to grips with overly complex calculations in a matter of months.
Andrew Vaughan, a partner at Barnett Waddingham, said: “It’s worrying that EIOPA considers a single impact study to be enough, as pension schemes are likely to end up with Solvency II by the back door. In many areas the calculations have been copied from Solvency II without sufficient consideration for the differences between insurance companies and pension schemes. EIOPA’s timetable has been set by reference to the EC’s desire to publish a revised directive by summer 2013, but the short timescales will mean that EIOPA’s advice will not have been properly scrutinised and a flawed directive would be rushed through.”
“The European Commission has not demonstrated the need for the proposed approach. We believe that the cost to small and medium-sized pension schemes of complying with the proposals will significantly outweigh any benefits in terms of improved solvency and governance. We urge EIOPA to go back to first principles and design an IORPs directive specifically for pension schemes.”
PLANSPONSOREurope Staff editors@plansponsoreurope.com