Speaking with IPE, he claimed there was currently no pressing need to change the existing capital requirements for pension funds. But he confirmed that BaFin would continue to take part in the technical work on a potential future IORP framework, particularly with respect to the HBS approach, which he described as “attractive in principle”. “It aims to ensure that the various safety and adjustment mechanisms existing in funded European pension systems are made comparable", he said.
But he also acknowledged that the results of the most recent quantitative impact study (QIS) showed that the question of whether the HBS approach can, in fact, be implemented ”cannot yet be assessed”. He said: “We have to wait for the results of further technical work by EIOPA.”
Provided that a risk-based quantitative framework is implemented, Hufeld said he would, in principle, also be in favour of an Own Risk and Solvency Assessment (ORSA) requirement for pension funds, similar to those under Solvency II. But he conceded that the question of whether these could be “filled with life” under IORP II – which will drop risk-based capital requirements for the time being – was “uncertain”. He said this was a question that “had not yet been talked about at the European level”. “In my opinion", he said, “a holistic balance sheet approach should not be introduced via the back door through an ORSA vehicle".
Hufeld said an HBS approach was “even more complex” than Solvency II because it included the assessment of safety mechanisms and benefit adjustments on top of market-consistent evaluations. “This will most likely present a major challenge for many IORPs, and this is certainly also one reason why mainly large IORPs have taken part in the QIS", he said.
For future impact studies, he said he would like to see a similarly high participation level from German Pensionskassen and Pensionsfonds, in addition to smaller IORPs.
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