Quantitative impact study for revised IORP Directive a 'complete failure'

EUROPE – The European Commission's first quantitative impact study (QIS) for the holistic balance sheet approach in the revised IORP Directive has been a "complete failure", according to the association of German company pension schemes (VFPK).

The VFPK said the QIS included "grave technical mistakes" and failed to consider a pension fund's business model.

For this reason, the study is a "complete failure" and should not be taken as a basis for further decisions.

"The main mistake," said VFPK chairman Helmut Aden, "is that Solvency II was taken as a basis for the QIS study."

Aden said a number of experts, even in sectors outside occupational pensions, had questioned the European Commission's handling of Solvency II.

He also argued that many of the terms in the QIS lacked proper definition and that Pensionskassen had been "forced to interpret the technical specifications themselves".

"This makes both a conclusion and a comparison of the various results impossible," he said.

Aden argued that Solvency II and the holistic balance sheet approach were "unsuitable instruments" for determining capital requirements of company pension funds, as their liabilities were "extremely long term".

Peter Hadasch, a board member at the VFPK, added: "We are questioning a mark-to-market evaluation when the market is massively manipulated by politics."

Aden said the European Commission should not "change the rules mid-game" by setting up new capital requirements and supervisory rules for contracts that had been part of Pensionskasse for decades.

The VFPK reiterated its opposition to Europe-wide regulation for pension funds, as most of the vehicles only operated in one country.

It also criticised the complexity of the QIS, which even large funds were only able to master with external help, and stressed that PensionsEurope reported only a 1% participation rate among European pension funds.

Earlier this week, PensionsEurope urged the European Commission to shift the revised IORP Directive's focus away from capital requirements under the first pillar towards pillars II and III, which aim to improve governance and transparency at occupational schemes.