Occupational Pensions Stakeholder Subgroup on Occupational Pensions Mandate

Transcription

1 EIOPA OCCUPATIONAL PENSIONS STAKEHOLDER GROUP SUBGROUP OCCUPATIONAL DC OCTOBER 2016 EIOPA-OPSG October 2016 Occupational Pensions Stakeholder Subgroup on Occupational Pensions Mandate I. Background The pensions landscape in many EU member states has changed and continues to change with a move away from Defined Benefit (DB)- towards Defined Contribution (DC) -schemes and various hybrid schemes such Collective DC. Today new occupational pensions are usually offered by pure DC or hybrid schemes, even though in some countries (e.g Germany) DB is still the only legally qualified option. The occupational DC pensions may have similarities with personal pension products even though many features differ as well. Social and labour law is the basis for many occupational schemes and consumer protection legislation is emphasized more in personal pension products. Both are faced with many common issues such as good governance and information disclosure. Occupational DC, DB and personal pension products may all play an important role in developing cross-border pensions in the EU. The financial sustainability of public pensions has been improved with various reforms in many countries but as a result the projected replacement rates will drop considerably in many countries. This puts the adequacy of retirement provision in question and there is a clear need to provide more funded private pensions. In practice very limited progress has taken place with the notable exceptions of e.g. the UK auto-enrolment system introduced in 2012 and which has already increased the coverage of occupational pensions by more than 6 million people. New pension provisions are mainly DC and the level of contributions is often quite low and thus the adequacy of occupational pensions remains a problem. The extremely low interest environment seems pervasive for the foreseeable future. Pension funds have to deal with the low investment returns as well as for the DB pensions with the valuation of liabilities. Also hedging liabilities and investment risks has become increasingly difficult. Trilogue negotiations were concluded in June 2016 with a political agreement on the final text of the revised Institutions for Occupational Retirement Provision Directive (IORP II) and its formal approval by the Permanent Representatives Committee (COREPER) of the Council. Subject to a plenary vote by the European Parliament planned in Autumn 2016, the text will be officially adopted upon its publication in the Official Journal of the European Union. EEA members will have two years to implement the new Directive. The OPSG needs to react to the final outcome of the 1/5

2 Directive and to various issues during the implementation phase. EIOPA published in April 2016 an IORP Quantitative Assessment and EIOPA s opinion for Risk Assessment and Transparency for IORPs. There is no plan to introduce harmonised solvency rules. EIOPA conducted the first ever stress tests on IORPs in 2015 and plans to continue with them in EIOPA is interested in the vulnerabilities identified in the 2015 stress test of the occupational pension sector and is of the view that there may be a need for further supervisory response. There will emphasis on robust riskmanagement practices to manage the ongoing macroeconomic challenges. II. Structure 1. Subgroups During the 30 June 2016 meeting in Frankfurt, the OPSG Chair, based on the EIOPA Annual Work Programme 2016 and the EIOPA Multi-Annual Work Programme , proposed to establish three standing subgroups (SG) for the duration of the OPSG mandate: 1. Occupational Pensions 2. Consumer Protection 3. Personal Pensions The subgroup is organised in respect of the Article 9 of the Rules of Procedures. The OPSG also concurred on the following procedural points: a. Each OPSG member is expected to join one or several SG in function of his/her interests and availability. b. Each SG shall appoint a leader coordinate the activity of the SG and inform in the next regular meeting all OPSG members about the tasks and outcomes of the SG. c. Each SG shall create Work Streams (WS) to prepare OPSG responses on drafts, working documents and reports prepared by EIOPA, and Working Parties (WP) to provide EIOPA with its views on specific issues on its own initiative. d. Each OPSG member is expected to join one or several WS/WP in function of his/her interests and availability. e. The SG leaders shall coordinate the creation and dissolution of WS/WP, in consultation with the SG members. Each SG member may propose the creation of a WP to prepare an opinion or advice. f. The WS/WP will be composed of members of the relevant SG. However, all OPSG members will be informed of the creation of a WS/WP and invited to join the WS/WP if they wish to contribute to its work. Each WS and WP shall appoint 2/5

3 a leader who shall coordinate the work of the WS/WP. g. When a WS/WP has finalized a draft text, its leader shall submit the draft to the relevant SG, highlighting if necessary outstanding issues that could not be resolved by the WS/WP. h. The SG shall decide when a draft text is ready to be presented to the OPSG. The draft shall be presented by the SG leader and/or the WS/WP leader for comments and approval. 2. Work Streams and Working Parties 2.1 Organisation The Subgroup Occupational Pensions will prepare topics in the following Work Streams (WS) and Working Parties (WP) which are under the SG. Subgroup lead: Francesco Briganti (Industry) Works Streams: 1. Risk Assessment and Transparency (Lead Falco Valkenburg) 2. Communication tools (Charlotta Carlberg) 3. Financial Stability (Fieke van der Lecq) 4. IORP Stress Tests (Stefan Nellshen) 5. IORP II and its implementation, incl. consumer protection issues (Paul Kelly) 6. Pan-EU Occupational Defined Contribution 1 (Lead Francesco Briganti) Working Parties: 2. Financial instruments & ALM (Giuseppe Corvino) 2.2 Tasks of the Work Streams Tasks WS1: Prepare an OPSG reaction to EIOPA s IORP Quantitative Assessment 2015 and EIOPA s opinion for Risk Assessment and Transparency for IORPs (May - June 2016) Tasks WS2: OPSG Opinion about communication tools and channels for occupational pension schemes. Task WS3: Prepare an OPSG response on EIOPA s financial stability reports (project outline Q2 and Q and 2017) Tasks WS4: EIOPA plans to conduct 2 nd Stress Tests on IORPs in WS prepares an OPSG reaction to EIOPAs plans and stress tests results (2017) Task WS5: Follow up and prepare OPSG reactions to the final IORP II Directive and during the implementation period of IORP II Directive ( ). 1 Project included in EIOPA s 2017 Annual Work Programme (AWP) (references in the 2nd table of page 9 and the bottom table of page 36) 3/5

4 Task: WS6: Provide input to EIOPA s project on Pan-EU Occupational Defined Contribution and prepare a written opinion following any publication by EIOPA. Any other tasks decided upon by OPSG. 2.3 Tasks of Working Parties Tasks WP1: Follow pension investment issues, investigate issues relating to the use of derivatives in managing liabilities and prepare OPSG reactions. (TBC) III. Expiration of mandate This mandate will be reviewed and if necessary revised in The mandate of the subgroup expires upon the date of expiry of the OPSG in October The duties of WS s and WP s expire when the planned tasks are completed. IV. Organisation of work The lead of the SG organizes the work together with the WS/WP leads. The work is organized through conference calls with the members of the subgroup and one or two representatives of EIOPA for organisational/technical support. The work may also be organized through conversations to the extent considered feasible by the WS/WP lead. The Subgroup leader sends documents at least one half-day before the conference call gathering the subgroup members comments or as decided within the subgroup. The Subgroup leader sends draft documents to the full OPSG at least 2 weeks ahead of the regular meetings. V. Members Subgroup lead: Francesco Briganti (Industry) Subgroup members: Industry Janwillem Bouma, Paul Brice, Lukasz Budzynski, Michaela Koller, Stefan Nellshen, Kevin O Boyle. SMEs Alf Alviniussen Professional Associations Charlotta Carlberg, Laure Delahousse, Paul Kelly, Sonia Maffei, Bernard Delbecque, Falco Valkenburg. Beneficiaries Claudia Menne, Marianne Osterkorn Employees Tomas Bern, John O'Quigley, Damien Lagaude Academics Paul Cox, Fieke van der Lecq, Raimond Maurer, Michael Reiner 4/5

5 VI. Deliverables OPSG Subgroup on Occupational Pensions Milestones and deliverables Timeline (Q2-Q Q1-Q4 2017) OPSG expected date of discussion/ approval* Priority High (H), Medium (M), Low (L) Work Stream 1 Risk Assessment and Transparency (Falco Valkenburg) OK 04/10/16 H Work Stream 2 Communication tools (Carlotta Carlberg) Publication Sept December 2016 (written procedure) M Work Stream 3 Financial Stability (Fieke van der Lecq) FSR published biannually (June and December) Q Q /02/17 M One per year Work Stream 4 IORP Stress Tests (Stefan Nellshen) Q Q Depending on the EIOPA publications (technical specifications and then results of the tests) H Work Stream 5 IORP II and its implementation (Paul Kelly) Work Stream 6 Pan-EU Occupational DC (Francesco Briganti) Q /11/16 H Input Q1-Q Opinion Q February 2017 TBD H Working Party 1? L Financial Instruments & ALM (Giuseppe Corvino) *OPSG meeting dates 2016: 04/10; and Joint BoS-IRSG 28/11 *OPSG meeting dates 2017: 28/02; 26/04; 20/06; 05/10 and Joint BoS-IRSG 28/11 5/5