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Eiopa criticised over Iorp ambiguity

Thursday 12 January 2012 - by

The European Insurance and Occupational Pensions Authority has been accused of glossing over an "absolutely fundamental" part of draft advice on pension fund regulation.

Consultancy Mercer says that an Eiopa consultation on revisions to the Iorp directive is undermined by its failure to consider what action pension schemes will have to take if they are deemed to have insufficient assets to reach minimum regulatory levels.

The fact that no concrete measures were put forward by Eiopa underlines Mercer's perception that the regulation is only being proposed as an extension of the Solvency II directive to the Iorp sector, rather than because it is suitable for the industry, the consultancy said on Thursday.

Deborah Cooper, partner at Mercer, says: "Regulation needs to be sensitive to the objectives of the entities being regulated and to support those entities achieving those objectives.

"The consultation goes into great detail on how assets and liabilities should be measured but contains nothing substantial about the steps that have to be followed if a scheme's assets fall short of its liabilities.

"This is absolutely fundamental to the regulatory process and highlights one of the key differences between a pension scheme and an insurance scheme," she adds.

The consultancy also argues that Eiopa's claim that it could be ready to consult on the revised directive before the end of 2012 is too tight, given that too much about the proposals is still unknown.

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