The German pensions industry has issued a clear rejection of any attempt to standardise solvency requirements across European pension funds.
At this week’s Handelsblatt occupational pensions conference in Berlin, Joachim Schwind - Chairman of the German Hoechst Pensionskasse and Board Member at German pension fund association Aba - pointed out that the holistic balance sheet (HBS) approach was “really a Solvency II concept with additional regulation for occupational pensions”. As such, he said it was highly complex and increased costs without taking sponsor support into account. Previous attempts to assess the value of a sponsor to IORPs have been branded “inconsistent” and “arbitrary”.
Schwind added that, even though solvency requirements were not part of the revised IORP Directive, the industry would “still have to deal with it” due to the stress tests EIOPA has scheduled between 11 May and 10 July this year.
However, Jung-Duk Lichtenberger from the European Commission’s Insurance and Pensions Unit said it had “no plans to introduce Solvency II through the back-door” and suggested it was unlikely any commissioner would pick up the topic again in the foreseeable future. “Harmonising solvency requirements is not an issue for us because we are aiming at solving problems of future pension arrangements, not those from past pension promises.”
Lichtenberger also hinted that EIOPA wanted to ensure pension funds were sufficiently aware of future problems. But Schwind pointed out the HBS was not fit to assess the solvency of pension systems because of their extremely long-term duration of 20 or more years. He argued that even life insurers had problems calculating their solvency requirements when their duration was only 10-15 years on average.
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