GOVERNING MEMBERS IOPS 10TH ANNIVERSARY

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2 IOPS 10TH ANNIVERSARY GOVERNING MEMBERS Albania: Financial Supervisory Authority Armenia: Central Bank of Armenia Australia: Australian Prudential Regulation Authority (APRA) Austria: Financial Market Authority Belgium: Financial Services and Markets Authority (FSMA) Botswana: Non-Bank Financial Institutions Regulatory Authority Brazil: National Superintendence for Closed Pension Funds (PREVIC) Bulgaria: Financial Supervision Commission Cayman Islands: Cayman Islands Monetary Authority Chile: Pensions Superintendence China: Chinese Insurance Regulatory Commission Colombia: Financial Superintendence of Colombia Costa Rica: Pensions Superintendence of Costa Rica Czech Republic: Czech National Bank Dominican Republic: Superintendence of Pensions Egypt: Egyptian Financial Supervisory Authority (EFSA) France: Prudential Supervisory Authority (ACP) Germany: Federal Financial Supervisory Authority (BaFin) Ghana: National Pensions Regulatory Authority Gibraltar: Financial Services Commission (FSC) Hong Kong, China: Mandatory Provident Fund Schemes Authority (MPFA) Honduras: National Commission on Banking and Insurance Hungary: The Central Bank of Hungary Iceland: Financial Supervisory Authority (FME) India: Pension Fund Regulatory and Development Authority (PFRDA) Indonesia: Financial Services Authority Ireland: Pensions Authority Isle of Man: Insurance and Pensions Authority Israel: Ministry of Finance Italy: Pension Funds Supervision Commission (COVIP) Jamaica: Financial Services Commission (FSC) Jordan: Insurance Commission Kazakhstan: National Bank of the Republic of Kazakhstan Kenya: Retirement Benefits Authority (RBA) Korea: Financial Services Commission (FSC) / Financial Supervisory Service (FSS) Kosovo: Central Bank of the Republic of Kosovo Lesotho: Central Bank of Lesotho Liechtenstein: Financial Market Authority Luxembourg: Financial Sector Supervisory Commission FYR of Macedonia: Agency for Supervision of Fully Funded Pension Insurance (MAPAS) Malawi: Reserve Bank of Malawi Maldives: Capital Market Development Authority (CMDA) Malta: Financial Services Authority Mauritius: Financial Services Commission (FSC) 2

3 Mexico: National Commission for the Pension System (CONSAR) Namibia: Namibia Financial Institutions Supervisory Authority (NAMFISA) Netherlands: Central Bank of the Netherlands (DNB) Nigeria: National Pension Commission Norway: Financial Supervisory Authority (Kredittilsynet) Pakistan: Securities and Exchange Commission Palestinian Authority: Capital Market Authority Papua New Guinea: Bank of Papua New Guinea Peru: Superintendence of Banking, Insurance and Pension Funds Administrators Poland: Polish Financial Supervision Authority Portugal: Insurance and Pension Funds Supervisory Authority Romania: Financial Supervisory Authority Rwanda: National Bank Serbia: National Bank Slovak Republic: National Bank South Africa: Financial Services Board (FSB) Spain: Ministry of Economy and Competitiveness Suriname: Central Bank Swaziland: Office of the Registrar of Insurance and Pension Retirement Funds Switzerland: Federal Occupational Pensions Regulatory Commission (OAK) Tanzania: Social Security Regulatory Authority Thailand: Securities and Exchange Commission Trinidad and Tobago: Central Bank Turkey: Pension Monitoring Center Turkey: Undersecretariat of Treasury Uganda: Uganda Retirement Benefits Regulatory Authority United Kingdom: The Pensions Regulator Zambia: Pension and Insurance Authority ASSOCIATE MEMBERS Panama: Civil Servants Pension and Saving Plan (SIACAP) South Africa: National Department of Social Development Romania: Private Pension System Rights Guarantee Fund International Association of Insurance Supervisors (IAIS) International Social Security Association (ISSA) Organisation for Economic Co-operation and Development (OECD) World Bank OBSERVERS American Council Life Insurers (ACLI) International Actuarial Association (IAA) Insurance Europe PensionsEurope 3

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5 INTRODUCTION The International Organisation of Pension Supervisors (IOPS) was founded in July 2004 by 24 initial Governing Members. The IOPS was originated by the Organisation for Economic Co-operation and Development (OECD) and the International Network of Pension Regulators and Supervisors (INPRS). The objective was to establish a formal, independent body of pension supervisors that would serve as a world-wide forum for policy dialogue and the exchange of information, as well as to be a standard-setting body promoting good practices in pension supervision. Ten years later, the founding aim to place the IOPS firmly on the map as the leading Organisation in the field of private pension supervision has been accomplished. The IOPS is a well-established and well-recognised independent international standard setting body. The Organisation currently has 83 Members and Observers representing supervisory bodies from 72 countries and territories worldwide - from Australia to Zambia - covering all levels of economic development and bringing together all types of pension and supervisory systems. WHY THIS WORK IS IMPORTANT IOPS Members supervised USD 8.8 trillion pension fund assets (2013) Saving for retirement is characterised by important social and economic features. Pension systems are continuing to develop and be refined around the world from growing funded pension systems in emerging markets to trends in established occupational pension schemes such as the on-going switch from DB to DC plans and the emergence of ideas to create so-called defined-ambition (DA) pension plans that combine positive features of both DB and DC plans. Compounded by the increased sophistication of financial instruments and the globalisation of international capital markets, all these changes make the task of pension supervision even more important from both microprudential (solvency of pension funds, safety and adequacy of pension promises) and macroprudential (financial stability of capital markets) dimensions. Moreover, the proper functioning of pension schemes and financial institutions involved in pension assets management and the provision of pay-out retirement products is crucially important from the social policy perspective. The supervisors in IOPS jurisdictions (including OECD countries that are IOPS members) were responsible for overseeing the management of USD 8.8 trillion pension fund assets in The IOPS weighted average ratio of pension funds asset-to-gdp was equal to 93.1% at the end of Source: OECD Global Pension Statistics (to which IOPS Members regularly contribute). 5

6 IOPS 10TH ANNIVERSARY Albania Australia (1) 358,915 1,056,795 1,458,132 Austria (2) 11,795 17,460 21,514 Belgium 13,585 15,875 21,161 Botswana.... 6,731 Brazil.. 176, ,346 Bulgaria 331 1,660 4,807 Chile 49,224 74, ,988 China (3).. 27,961 98,896 Colombia 7,315 31,403 66,911 Costa Rica 1,033 2,018 5,453 Czech Republic 3,127 9,909 14,951 Dominican Republic (2,4) 34 1,368 3,806 Egypt.. 3,969.. France (5).. 2,587 11,860 Germany 99, , ,474 Gibraltar (2) Hong Kong (China) 29,174 60, ,871 Hungary (6) 4,744 13,662 5,506 Iceland 11,647 13,857 22,986 India (2).... 5,450 Indonesia (7) 5, ,058 Ireland (8) 70,035 88, ,188 Israel 31,752 80, ,679 Italy 41,126 74, ,168 Jamaica.. 2,448 2,873 Kenya (7) 1,595 3,504 5,419 Korea 9,870 24,290 81,555 Kosovo (2) Lesotho (2) Liechtenstein (2).. 2,131 3,925 Luxembourg ,323 Macedonia (FYR) Maldives (2) Malta.... 1,692 Mauritius (2) Mexico (9) 35,737 90, ,255 Namibia (2).... 9,670 Netherlands 609, ,779 1,381,901 Nigeria (2).. 8,290 20,288 Norway 15,432 21,934 40,908 Pakistan Panama (4,7) Peru 6,381 16,162 36,630 Poland 12,017 47, ,563 Portugal 20,566 28,226 20,904 Romania ,513 Serbia, Republic of (2) Slovak Republic (10) 8 4,417 9,926 South Africa (2) 136, , ,385 Spain 61, , ,589 Suriname Switzerland (11) 364, , ,462 Thailand 7,257 13,333 22,965 Turkey.. 9,309 35,543 United Kingdom (12) 1,284,338 1,352,435 2,676,146 Zambia means not available. Total investment of pension funds in selected IOPS Governing and Associate Members, 2003, 2008 and 2013 In millions of USD 1. Data refer to the end of June of each year. 2. Data for 2013 refer to Source: MOHRSS. 4. Source: AIOS. 5. Data for 2013 refer to June (source: AFG). 6. As a result of a pension reform, the assets of mandatory pension funds decreased as of 2011, while voluntary pension fund assets did not change significantly. 7. Data for 2013 refer to Source: IAPF Pension Investment Survey. 9. There is a break in series in 2005, due to the inclusion of occupational pension plans registered by the National Commission for the Retirement Savings System (CONSAR) since 2005, not included in the previous years. Data for occupational pension plans in 2013 are preliminary. 10. There is a break in series in 2006, due to the inclusion of voluntary pension plans that were not included in the previous years. 11. Data refer to the first trend calculations for the year The figure for total assets at the end of 2013 is an early estimate based on the 2012 level of assets and the flow of transactions in It does not take into account value changes. A 2013 final estimate will be available in January Source: OECD Global Pension Statistics and other sources. 6

7 Total investment of pension funds in selected IOPS Governing and Associate Members, 2013 Netherlands Iceland Switzerland (1) Australia (2) United Kingdom (3) Weighted average South Africa (4) Namibia (4) Liechtenstein (4) Chile Ireland (5) Israel Botswana Hong Kong (China) Simple average Jamaica Peru Poland Colombia Malta Kenya (6) Mexico (7) Kosovo (4) Lesotho (4) Brazil Costa Rica Slovak Republic Portugal Spain Bulgaria Norway Nigeria (4) Czech Republic Dominican Republic (4,8) Korea Thailand Germany Italy Macedonia (FYR) Austria (4) Maldives (4) Turkey Hungary Belgium Romania Luxembourg Gibraltar (4) Indonesia (6) Mauritius (4) China (9) Panama (6,8) Serbia, Republic of (4) France (10) India (4) Albania Pakistan As a percentage of GDP Data refer to the first trend calculations for the year Data refer to the end of June of each year. 3. The figure for total assets at the end of 2013 is an early estimate based on the 2012 level of assets and the flow of transactions in It does not take into account value changes. A 2013 final estimate will be available in January Data for 2013 refer to Source: IAPF Pension Investment Survey. 6. Data for 2013 refer to Data for occupational pension plans in 2013 are preliminary. 8. Source: AIOS. 9. Source: MOHRSS. 10. Data for 2013 refer to June (source: AFG). Source: OECD Global Pension Statistics and other sources. 7

8 IOPS 10TH ANNIVERSARY THE ROLE OF IOPS AND WHY IT IS WELL PLACED TO UNDERTAKE THIS WORK The major goal of the IOPS is to improve the quality and effectiveness of the supervision of private pension systems throughout the world, thereby enhancing their development and operational efficiency, thus facilitating the provision of a secure source of retirement income in as many countries, for as many people, as possible. The IOPS is also an international standard-setting body on pension supervisory issues. Over the past ten years, drawing on the experiences of the variety of different pension systems in its member countries, the IOPS has developed an important body of standards, principles and guidelines providing a framework for global benchmarking of the supervision of private pension systems. The IOPS Principles of Private Pension Supervision and its supporting assessment framework serve as an important tool for Members to undertake self-assessment exercises to identify the main strengths and weakness of their supervisory structures and practices. Self-assessment outcomes are regularly shared with the broad membership to help identify common trends, issues and areas for development. In addition to project-based work, the IOPS provides assistance to pension supervisors, which includes areas such as risk-based supervision, particularly for those still planning or developing effective pension supervisory strategies in emerging markets. The aims and purposes of IOPS can be summarised as: serving as the international standard-setting body on pension supervisory matters and regulatory issues related to pension supervision, taking into account the variety of different private pension systems; promoting international co-operation on pension supervision and facilitating contact between pension supervisors and other relevant parties, including policy makers, researchers and the private sector; providing a worldwide forum for policy dialogue and exchange of information on pension supervision; participating in the work of relevant international bodies in the area of pensions, including joint activities to improve statistical collection and analysis; and promoting, conducting and facilitating the distribution and communication of research, and collecting information in co-operation with relevant international bodies. 8

9 THE MULTIPLE COMPONENTS OF IOPS WORK Setting international standards on pension supervisory issues The elaboration and promotion of guidelines and good practices on pension supervision has been the core activity of the Organisation since its foundation in In addition to the IOPS Principles of Private Pension Supervision, which were approved in 2006, and the IOPS Good Practices for Governance of Pension Supervisory Authorities (approved in 2013), a total of seven sets of Guidelines and Good Practices have been approved by the Governing Members since 2008 [ Working Papers The IOPS Working Paper Series was launched in 2007 and has since been updated with two or three new Working Papers per year. The papers aim to review the nature and effectiveness of new and established pension supervisory systems, providing examples, experiences and lessons learnt for the benefit of IOPS members and the broader pension community. The IOPS Working Paper Series examines and deals with the most cutting-edge issues in the area of private pension supervision covering political, structural, technical and operational supervisory matters: political responses of pension supervisors to financial and economic crisis; structural organisation, governance and financing of supervisory authorities; technical matters organisation of off-site inspections, stress testing and scenario analysis, introduction of pension risk-based supervision; operational matters supervising pension funds governance, collection and disclosure of information, fees and charges, risk management systems, investment default options, alternative investment and derivatives, etc. Assistance The IOPS provides assistance to pension supervisors, which includes areas such as risk-based supervision, particularly for those still planning or developing effective pension supervisory strategies in emerging markets. This assistance is provided primarily through two means bilateral discussions and regional seminars. The IOPS Secretariat and Members have been a valuable source of knowledge and experience for many pension supervisors. Feedback suggests that the sharing of country experiences, through Working Papers and regional seminars has been highly appreciated and has provided an excellent insight into policy debate and the private pension reform agenda when introducing risk-based supervision. 9

10 IOPS 10TH ANNIVERSARY HIGHLIGHTS AND ACHIEVEMENTS TO DATE Working Papers The IOPS Working Paper series highlights a range of challenges to be met in the development of national pension supervisory systems. The papers review the nature and effectiveness of new and established pension supervisory systems, providing examples, experiences and lessons learnt for the benefit of IOPS members and the broader pension community. The IOPS Working Papers are developed with the important input and assistance of the IOPS Members and are circulated to encourage discussion and feed policy debate in their respective jurisdictions. WP 20 04/2014 Update on IOPS Work on Fees and Charges This paper identifies the challenges in making comparisons of fees across different pension systems and updates the analysis of charge ratios for the countries that originally participated in the 2008 exercise, while looking at the historic trends of both fees charged by pension funds to members and the operating expenses of pension funds. WP 19 03/2014 Stress Testing and Scenario Analysis of Pension Plans Stress testing is a useful and increasingly popular method of analysing the resilience of financial systems to adverse events. It has only recently been considered for introduction to the pensions sector in some countries. This paper presents the results from a survey of stress testing practices among IOPS member countries and provides some reflections on whether, and how, stress testing could be applied in DC plans. In addition to the technical aspects of stress testing, the paper considers the governance requirements for stress testing, drawing some conclusions and lessons for pension supervisors as they introduce and develop their own techniques. WP 18 12/2012 Supervising Default Investment Funds This paper aims to address how to ensure that default funds are well designed, in the sense of them being suitable for the members who are placed in them, and how to identify the factors that need to be considered in designing a default investment option and supervising their operation. WP 17 12/2012 Supervision of Pension Intermediaries The goal of the paper is first to establish how private pensions are distributed in different IOPS member countries, and how pension intermediaries involved in the advice and sales process are regulated and supervised. The paper identifies common approaches and challenges encountered by IOPS members in their jurisdictions, and looks at different regulatory mechanisms and supervisory tools which have been used to overcome these issues. WP 16 07/2012 Structure of Pension Supervisory Authorities and their Approaches to Risk-Based Supervision This paper examines whether the Global Financial Crisis (GFC) has had an impact on pension supervision and it looks at the effect of the GFC on risk-based supervision (RBS), as well as examining the potential impact on the external and internal structure of pension supervisory authorities. WP 15 12/2011 Comparative Information Provided by Pension Supervisory Authorities The provision of information on pensions is of increasing importance as pensions savings are growing and becoming an important part of the financial system and as defined contribution pension plans, which usually involve some level of competition between 10

11 pension products and providers, are becoming more dominant. This paper examines the role pension supervisory authorities can play in providing information. How comparative information on costs, investment performance and comparative service data is presented by IOPS member authorities is outlined and some lessons learnt suggested. WP 14 03/2011 Efficient Information Collection The purpose of this paper is to provide guidance on the factors pensions supervisors should consider when deciding what information they need to obtain, and how such information can be collected and handled efficiently. Particular focus is given to information required for a risk-based approach to supervision. Suggestions and examples are provided on how supervisors may identify information needs and on the practicalities of obtaining (and sharing) information from different sources. WP 13 09/2011 Pension Fund Use of Alternative Investments and Derivatives: Regulation, Industry Practice and Implementation Issues This paper reviews the regulatory and supervisory controls in place to manage the potential risk exposures that alternative investments and derivatives present, canvasses implementation issues, highlights the potential risks and reviews current risk management practices observed by pension funds in managing these risk exposures. The paper finally concludes with observations which can be translated into lessons for consideration by supervisory authorities when developing future pension fund regulation and supervision practices relating to alternative investments and the use of derivatives, whilst also taking into account the IOPS Good Practices. WP 12 10/2011 Managing and Supervising Risks in Defined Contribution Pension Systems Defined contribution (DC) plans are playing a larger role in pension systems around the world. Pension supervisory authorities are consequently asking if their oversight approaches need to adapt to this development given that many of the risks within DC systems are borne by the plan members themselves. This paper highlights the key challenges for DC supervisors, outlining the different mechanisms which can be used to control risks within DC systems, and how the use of these mechanisms inform the supervisory approach. Case studies of IOPS members overseeing DC systems are also provided. 11

12 IOPS 10TH ANNIVERSARY WP 11 11/2009 Pension Funds Risk-management Framework Drawing on the experience of the pension and other financial sectors, this paper examines what sort of riskmanagement framework pension funds should have in place. Such frameworks are broken down into four main categories: management oversight and culture; strategy and risk assessment; control systems; and information and reporting. Ways in which supervisory authorities can check that such systems are operating are also considered, with a check list provided to assist pension supervisory authorities with their oversight of this important area. WP 10 11/2009 Governance and Performance Measurement of Pension Supervisory Authorities The governance, oversight and performance measurement of financial supervisory authorities are increasingly recognized as important topics not least due to the recent financial crisis and consequential questions about the regulatory oversight of financial institutions. Yet this is a relatively under-researched area, particularly in relation to pension supervision. This paper therefore attempts to combine theoretical material from a range of financial sectors along with practical examples from the pensions sector to establish what the good governance of pension supervisory authorities entails, how it is applied in practice, and how it can be monitored and measured. WP 9 04/2009 Private Pensions and Policy Responses to the Financial and Economic Crisis This paper discusses responses to financial and economic crisis by regulators, supervisors and policy makers in the area of private pensions. These responses are examined in the light of international guidelines, best practices and recommendations to improve the design of private pensions. WP 8 08/2008 Supervisory Oversight of Pension Fund Governance This working paper mainly analyses the responses of IOPS members to a survey on supervisory oversight of pension fund governance. The survey and responses cover the current focus, issues and problems as well as future developments. A few case studies are also included in the paper to illustrate the different types of issues that pension fund systems may face and the means that may be adopted by the relevant supervisory authorities to resolve these issues. WP 7 05/2008 Transparency and Competition in the Choice of Pension Products: The Chilean and UK Experience This paper discusses two countries building centralised information and quotation systems for annuity products to help individuals select the right retirement product at the right price. The SCOMP system in Chile is examined and developments around the Open Market Option (OMO) in the UK are discussed, with lessons drawn for other pension supervisory authorities contemplating introducing such centralised systems. WP 6 06/2008 Comparison of Costs and Fees in Countries with Private Defined Contribution Pension Systems. [Note that this paper has been superseded by 04/2014] The fees and charges imposed upon pension funds are of great interest and importance to pension supervisory authorities as they have a significant impact on the amount of retirement income delivered to individuals, particular in the case of defined contribution (DC) pension schemes. Yet administrative fees are charged for services in different ways, with the diversity of charges and the specific details involved in each case making it impossible to directly compare administrative charges nationally and internationally. This paper therefore attempts to model such charges on a unified basis to allow for a standardized international comparison, known as the charge ratio. WP 5 09/2008 Information for Members of DC Pension Plans: Conceptual Framework and International Trends In recent years, the shift towards defined contribution (DC) pension plans has been a key trend in the field 12

13 of private pension provision. In this context, where a wide range of options may potentially be available to individual plan members, it is crucial to ensure that they have the information necessary to make appropriate choices. Based on the findings of an IOPS survey, this paper offers a conceptual framework for considering information provision within the context of the pension system and related factors (such as the range of choices offered to individuals, the use of default options, the level of financial literacy, etc.). WP 4 08/2007 Experience and Challenges in Introducing Risk-based Supervision for Pension Funds Just as other financial sectors have moved towards a risk-based approach to supervision, pension supervisory authorities are also looking to follow the handful of pioneer authorities which have adopted these methods, namely the Netherlands, Mexico, Denmark and Australia. Examining some countries that have learnt from these pioneers, this paper focuses on the experiences and challenges they have faced in adopting risk-based pension supervision. WP 3 08/2007 Utilisation of Information Technologies in Offsite Supervision of Private Pension Systems The increasing intricacies of private pension systems raise the importance of supervising these systems effectively. How can IT be used to do this? How can IT be integrated into an existing system? With a case study on Turkey, this paper lays out a field for discussion of this question, offering some initial suggestions for international good practise. WP 2 08/2007 Supervisory Education, Outreach and Communication, including Training of Trustees Some pension supervisors have responded to the growing complexity and importance of private pension provision by delivering education programs for pension fund managers, fiduciaries and members. This paper draws together information on how and why these programs are carried out, analysing their impact and effectiveness in examples from Kenya, Ireland, South Africa and the UK. WP 1 08/2007 A Review of the Pros and Cons of Integrating Pension Supervision with that of Other Financial Activities and Services With the rise of large conglomerates offering a range of financial services, is a single agency the most appropriate means of supervising financial intermediaries (banks, insurance companies, securities firms)? Should pension funds be supervised by such integrated authorities? Examining a range of arguments, this paper concludes that the answer depends on the context and environment of the pension system. 13

14 IOPS 10TH ANNIVERSARY IOPS PRINCIPLES, GUIDELINES AND GOOD PRACTICES The elaboration and promotion of guidelines and good practices on pension supervision form part of the core activities of the Organisation. IOPS Principles of Private Pension Supervision The IOPS Principles of Private Pension Supervision were approved by the governing members at the Annual General Meeting held in Istanbul in A methodology for authorities to undertake self-assessment against the Principles has also been developed. The Principles were revised in These Principles cover topics such as objectives, independence, adequacy of resources and powers, risk-orientation, proportionality and consistency, consultation and cooperation, confidentiality, transparency and governance. IOPS member authorities are widely adopting the IOPS Principles and using them as a basis for benchmarking and self-assessment. These Principles have also been incorporated into the Organisation for Economic Co-operation and Development (OECD) Core Principles of Occupational Pension Regulation and have been used by the IMF and the World Bank in the Financial Sector Assessment Programmes (FSAP). The IOPS Principles were also adopted by the International Association of Entities Supervising Pension Funds (AIOS). IOPS Guidelines and Good Practices In addition to the IOPS Principles of Private Pension Supervision, the following guidelines have been approved by the Governing Members. These guidelines and good practices are not legally binding instruments. However the Members are encouraged to observe and adopt them and identify the areas of weakness to bring the regulation and supervisory regimes and techniques in line with international standards: IOPS Good Practices for Governance of Pension Supervisory Authorities (2013): Promoting good governance has been at the heart of on-going reform efforts in many countries in recent years. Adherence to good governance practices by private pension funds (and other financial institutions responsible for managing and administering private pensions) and also by public authorities involved in their regulation and supervision is essential for strengthening private pension systems and enhancing public confidence in the oversight process. Recognising the crucial importance of good governance for pension supervisory authorities as highlighted in the IOPS Principles of Private Pension Supervision, the IOPS has developed good practices as guidance for its Members and other pension supervisory authorities. 14

15 OECD/IOPS Good Practices for Pension Funds Risk Management Systems (2011): These Good Practices aim to outline the main features of risk management systems which pension funds employ. They cover the role of management in the risk management process, look in more detail at investment risk, funding risk and operational risk (including outsourcing) control. The good practices also provide guidance for pension fund regulators and supervisors on how to check that such systems are operating effectively. OECD/IOPS Good Practices on Pension Funds Use of Alternative Instruments and Derivatives (2011): The OECD and the IOPS developed these good practices in view of the increasing use of alternative investments and derivatives by pension funds and the opportunities and risks they present to the security and safety of retirement benefits. The Good Practices reflect what pension regulatory and supervisory authorities usually expect to examine when assessing the risk management of pension funds that use alternative investments and derivatives. As such, the Good Practices may also help and encourage pension funds to improve their risk management practices and thereby use these instruments safely and effectively. IOPS Good Practices in the Risk Management of Alternative Investments by Pension Funds (2010): directed at pension supervisory authorities to assist them in assessing whether pension funds are managing their alternative investments adequately. In particular, they focus on less liquid, less transparent, high-risk investment vehicles. The Good Practices are designed to assist such assessments in the context of a principles-based approach to supervision. IOPS Guidelines for Supervisory Intervention, Enforcement and Sanctions (2009): covers the powers necessary for supervisory authorities to undertake preventive, protective or punitive interventions successfully, and provide directions to pension supervisors on how to develop a suitable enforcement approach in order to protect members and beneficiaries, maximise benefits and minimise costs. IOPS Guidelines for the Supervisory Assessment of Pension Funds (2008): The purpose of these guidelines is to provide pension supervisors with general supervisory standards for the conduct of the supervisory process. It should be noted that these guidelines mainly focus on prudential supervision. OECD/IOPS Guidelines on the Licensing of Pension Entities (2008): The Guidelines promote effective and impartial licensing requirements and procedures, thus strengthening confidence in the pension system as well as its supervisory system. These Guidelines were approved by the OECD Council. 15

16 IOPS Toolkit for Risk-Based Supervision The IOPS has developed an extensive research base on the topic of risk-based supervision (RBS), which can be used to educate and inform supervisors about developments in this area or to provide the basis for the articulation of standards and good practices. As a first part of the project on RBS, a major publication on risk-based supervision was jointly prepared and released by the World Bank and the IOPS. The book includes country case studies on supervisory authorities with leading risk-based pension supervision systems (Australia, Netherlands, Denmark and Mexico), along with analytical papers on the subject. Drawing on accumulated countries experiences and knowledge, the core of the project was to produce a toolkit for RBS. The IOPS Toolkit for Risk-based Supervision was officially launched in December Commenting on the launch of the Toolkit, the former IOPS Technical Committee Chair and former Superintendent of Pensions in Chile, Ms. Solange Berstein said: The Toolkit represents a major piece of work for the IOPS, building on extensive contribution from many member countries and providing practical assistance to supervisors around the world as they follow their peers in other financial sectors in adopting these innovative techniques. In Chile, though the implementation process has been challenging, we have learnt much from our international colleagues and are finding the new techniques invaluable. I look forward to the Committee adding further practical examples and country experiences to the Toolkit in the coming years. The Toolkit s case studies are reviewed regularly whether a new jurisdiction introduces RBS or an existing one reviews and improves its processes. The case studies will reflect these changes - and new case studies are added. The Toolkit is broken down into modules providing practical guidance and includes comprehensive case studies to illustrate how supervisors have dealt with the challenges inherent in implementing the concepts and techniques of risk-based supervision. The modules have been made as practical as possible and each contains check lists, guidance and examples for the attention of supervisory authorities. The IOPS can provide guidance to countries that are introducing, or are new to, the concept of RBS by organising country-targeted specific events. Examples of countries where such events have been organized are Nigeria, Peru and Brazil. The modules for the toolkit include: Introduction to RBS Module 1 Preparation for RBS Module 2 Quantitative risk assessment Module 3 Risk identification Module 4 Risk scoring models Module 5 Supervisory responses The IOPS Toolkit for Risk-based Supervision is online at 16

17 LOOKING TO THE FUTURE The future work of the Organisation will continue to concentrate on developing and improving international standards relating to pension supervision and on analysing and addressing pension-related supervisory challenges in the areas of consumer protection, investment strategies, default funds, key risk indicators and other risk-management tools for pension supervision. RESEARCH AND EVENTS Conferences Alongside its Annual General Meeting, the IOPS, jointly with the OECD, holds an annual Global Forum on Private Pensions and actively contributes to major international pension events. The Global Forums on private pensions address a wide range of issues of high relevance to the national policy debate on retirement savings in both developed and emerging economies. In addition, the IOPS organises various regional outreach events, the first of which took place in 2008 in Dakar, Senegal. Building on the success of this meeting, similar regional events have since been organised in Egypt, Jamaica, Turkey, Poland, Jordan, Nigeria, Peru, Brazil, Macedonia, Romania, Kenya and Iceland. These events address selected topics relating to the implementation of efficient and effective regulatory frameworks and supervisory regimes. OECD/IOPS GLOBAL FORUM ON PRIVATE PENSIONS 2015 Berlin, Germany 2006 Istanbul, Turkey 2016 Hong kong, China 2007 Beijing, China 2013 Seoul, Korea 2005 Bangkok, Thailand 2014 Swakopmund, Namibia 2008 Mombasa, Kenya 2012 Santiago, Chile 2009 Rio de Janeiro, Brazil 2011 Cape Town, South Africa 2017 Port-Louis, Mauritius 2010 Sydney, Australia 17

18 IOPS 10TH ANNIVERSARY Databases The IOPS website ( serves as an authoritative source of information on pension supervision issues. The electronic library is a source of pension research material. In addition, the IOPS is building a database of information on its members, providing key pension statistics, and overviews of the pension systems in member countries and details of the pension supervisory systems employed. The IOPS continues to successfully cooperate with the International Social Security Association (ISSA) and the OECD to improve and extend the ISSA/IOPS/OECD Complementary and Private Pensions database of pension regulatory systems, which offers a unique source of official information on regulatory and supervisory aspects of private pension arrangements in Members countries ( ISSA/IOPS/OECD COMPLEMENTARY AND PRIVATE PENSIONS DATABASE Research Projects It should be stressed that the key resource of the IOPS is its very active membership. Research projects are proposed, led and developed by country members and teams. The new biannual IOPS Programme of Work (POW) for was agreed by Members at the Swakopmund Annual General Meeting on 2 October

19 RELATIONS WITH OTHER ORGANISATIONS The IOPS continued to work closely with the following international organisations. pensions Organisation for Economic Co-operation and Development (OECD): The IOPS co-operates intensively with the OECD s Working Party on Private Pensions by means of the development of joint standard setting activities and research projects. Joint activities in the past include work on the licensing and supervision of pension entities, pension funds use of alternative investments and derivatives, pension funds risk management framework, default investment strategies, work on costs and charges and responses to the economic and financial crisis. The IOPS and the OECD Working Party also jointly organise research conferences, joint summer meetings and the OECD/IOPS Global Forum on Private Pensions. In 2014, the summer joint meeting was held in Paris, France, while the Global Forum took place in Swakopmund, Namibia on 2-3 October The OECD continues to provide Secretariat support to the IOPS via the partnership agreement signed by the two organisations in 2005 and renewed three times in 2008, 2011 and The IOPS also continued to contribute to the G20/OECD Task Force on Financial Consumer Protection, the Task Force on Pension Statistics and the G20/OECD Task Force on Institutional Investors and Long-Term Financing. International Social Security Association (ISSA): the joint database on complementary and private pensions is further being developed and extended by the three organisations involved (IOPS, ISSA and OECD). World Bank: representatives continue to attend IOPS meetings and provide input and comments to IOPS projects. The project of the World Bank to introduce the IOPS Principles in their FSAP assessments is on-going, after a series of presentations by the Bank s representatives in the Technical Committee meetings and consultations between the representatives of the two international organisations. International Association of Insurance Supervisors (IAIS): the two organisations continue to work closely to ensure that overlaps are avoided and synergies exploited. The two organisations regularly provide each other with updates on finalised projects and other work in progress. Joint seminars were organised by the IOPS and the IAIS in Skopje, Macedonia in May 2012 and Reykjavik, Iceland, in February

20 IOPS 10TH ANNIVERSARY International Actuarial Association (IAA): the two Organisations contribute to achieving their respective programmes of work by providing substantial comments on the main projects developed. In 2013, the two organisations have initiated a common project on the Role of actuarial review and calculations in pension supervision. International Association of the Latin American Pension Fund Supervisors (AIOS): has decided to adopt the IOPS Principles and has translated them into Spanish. European Insurance and Occupational Pensions Authority (EIOPA): the IOPS and the EIOPA provide regular updates of each other s work. eiopa.europa.eu 20

21 STRUCTURE AND MEMBERSHIP Types of Membership Governing Membership Any entity, responsible in whole or in part for the supervision of pension funds, plans, schemes or arrangements in a country or in the subdivision of a country, whether invested with its own personality or not. Associate Membership Any governmental authority including any international authority, that is responsible in whole or in part for pension regulation or the establishment of pension policy and that has an interest in pension supervision and any international governmental (or similar) organisation that has a direct, institutional interest in pension supervision. Observer-status Membership Other entities interested in pension supervision such as research organisations, industry bodies, financial institutions and professional firms engaged in the business of providing pension-related services. Committees The IOPS operates by Committees: an Executive Committee and a Technical Committee. In addition to the Committee meetings, regional and annual meetings are held. Executive Committee The Executive Committee has all the powers necessary to achieve the objectives and purposes of the Organisation. Members: Australia, Austria, Botswana, Costa Rica, Egypt, Hungary, Hong Kong (China), India, Italy, Kenya, the Netherlands, Romania, Turkey Ex officio members: President: Dr. Edward Odundo, Retirement Benefits Authority, Kenya Vice President: Mr. Edgar Robles Cordero, Pensions Superintendence, Costa Rica Chair of the Technical Committee: Mr. Darren McShane, Mandatory Provident Fund Schemes Authority, Hong Kong, China Treasurer: Mr. Dirk Broeders, Central Bank, the Netherlands Technical Committee The Technical Committee participates in and conducts the development of principles, standards and good practices on pension supervisory issues and serves as a forum to discuss and analyse matters related to pension supervision that are of interest to the membership. Participation in the Technical Committee meetings is open to all IOPS members. Chair: Mr. Darren McShane, Mandatory Provident Fund Schemes Authority, Hong Kong, China Vice-Chairman: Mr. Dirk Broeders, Central Bank, the Netherlands Former Executives IOPS President ( ): Mr. John Ashcroft, The Pensions Regulator, United Kingdom IOPS President ( ): Mr. Ross Jones, Australian Prudential Regulation Authority Chair of the IOPS Technical Committee ( ): Mr. Aerdt Houben, Central Bank, the Netherlands Chair of the IOPS Technical Committee ( ): Ms. Solange Berstein, Pensions Superintendence, Chile Secretariat The IOPS Secretariat is hosted by the Organisation for Economic Cooperation and Development (OECD), according to the IOPS/OECD partnership agreement. IOPS Secretary General: Mr. André Laboul 21

22 IOPS 10TH ANNIVERSARY QUOTES Since its inception ten years ago, the IOPS has strived to fulfill its mandate of improving supervision of private pension systems through continuous development of globally accepted standards and best practices on supervisory and regulatory issues affecting pertinent areas in the pension sector. These guidelines are now being applied globally across member and non-member countries. In developing these guidelines, the IOPS has experienced lots of interaction amongst member countries. This has fostered exchange of ideas on policy issues and capacity development through exchange programs leading to improved supervision in their respective jurisdictions. In the foreseeable future, I envision more regulatory bodies joining the IOPS to leverage its best practices. By and large, the IOPS has greatly enhanced the way pension regulators do their work, which has resulted in improved pension governance across the different jurisdictions and helped resolve many of the pension-related supervisory challenges faced by members. As we continue building on this solid foundation, it is my belief that we will expand the provision of a secure source of income that will guarantee a dignified life in retirement. Dr. Edward Odundo, IOPS President, CEO, Retirement Benefits Authority, Kenya One of the main lessons of the 2008 world financial crisis is that supervision of pension funds must evolve from compliance to risk-based. In this respect, the level of access to the latest developments that the IOPS gives to members is unparalleled around the world. There is so much to learn from each country s experience, that following the guidance set forth by the IOPS principles helps everyone to avoid repeating mistakes, which in turn favours a better quality of life during elderly. Mr. Edgar Robles Cordero, IOPS Vice-President, Pensions Superintendence, Costa Rica 22

23 The international framework for cooperation and standard setting amongst supervisory bodies has long been under-developed in the pension space compared to other areas of financial services. There are many historical reasons why this is so, largely related to the fact that pension systems are not just a financial product, but a key part of jurisdiction specific welfare and labour policy. Before the emergence of the IOPS, and its predecessor the INPRS, there was limited ability for pension supervisors to learn from common experiences and developments. The ongoing development of the IOPS organisationally, provides a valuable opportunity for pension supervisors to share experiences and learnings as well as a forum for establishing international benchmarks and standards. Despite, and indeed because of, the jurisdiction specific diversity of pension arrangements, there is much that can be gained from the formal and informal interactions that only a body like the IOPS can provide. I would urge all pension supervisory bodies, and other bodies interested in pension supervision, that want to share in the collective knowledge and experience of global supervisory practices, to be an active contributor to the work and the outputs of the IOPS. Mr. Darren McShane, Chair of IOPS Technical Committee, and Chief Regulation and Policy Officer and Executive Director, Mandatory Provident Fund Schemes Authority (MPFA), Hong Kong, China I am pleased to state that over the 10 years since its establishment, the IOPS has successfully managed to pave its way to become the leading standard setting international organisation in the area of pension supervision. Today over 80 organisations from more than 70 jurisdictions belong to our Organisation. The collective knowledge of IOPS members spans different types of pension structures and systems with unique historical, social and economic characteristics. These diverse experiences have benefited the IOPS tremendously. I hope that the organisation will continue to grow even further to promote exchange of knowledge and expertise on pension supervision amongst members as well as other pension stakeholders. During this time, the IOPS proved to be a constructive participant in the international dialogue on pension supervision and influenced policy debates and reforms taking place in its member jurisdictions. The IOPS provided assistance to members that were establishing or reshaping their pension supervisory frameworks and in particular, facilitated members in developing risk-based approaches to pension supervision. Its mission is to continue this work, which is aimed at establishing efficient supervisory systems to protect the interests of members and beneficiaries in the world. The Secretariat that I have been honoured to lead since the inception of the IOPS is proud to serve the Organisation and will do its best to continue to perform its functions as successfully as possible. Mr. André Laboul, IOPS Secretary General, Counsellor, Directorate for Financial and Enterprise Affairs, OECD 23

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