On 23 May, International Market and Services Commissioner Michael Barnier released a statement announcing that the reforms to the IORP Directive he intends to propose in autumn will not include any solvency requirements for defined benefit (DB) pension schemes. Instead, the focus of the proposals will be to improve the governance and transparency of occupational pension funds. Barnier stated that ‘further technical requirements’ were needed before deciding on the solvency of pension funds, which must ‘for the time being remain an open issue’ in need of re-examination once they have more complete data. The issue of solvency requirements is likely to be postponed until after the Commissioner is replaced in November 2014.
This announcement comes after the EIOPA released preliminary results from its quantitative impact study (QIS) on the effect of proposed revisions to the IORP Directive on 9 April. In these results, EIOPA had suggested that a holistic balance sheet approach could be adopted to ensure that pension funds meet similar solvency requirements across Europe. However, this approach was met with widespread opposition, due to the high financial burden it would place on DB scheme sponsors and employers. Consequently, the pensions industry have unanimously welcomed Barnier’s announcement and are hopeful that plans to introduce a uniform solvency requirement across the EU will be dropped. Please see the following links to view responses from the pensions minister Steve Webb, NAPF and CBI.
EIOPA is due to publish a final report on its QIS in mid-2013.