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ULB- AABr Séance académique Les fonds de pension à l’aune de S-2

ULB- AABr Séance académique Les fonds de pension à l’aune de S-2. Karel Van Gutte Secrétaire-Général Bruxelles , 14 Novembre 2011. Agenda:. ABIP-BVPI-BAPI? Objectifs de la CE et de l’EIOPA Révision de la directive: enjeux et perspectives & S-2 vu par l’ABIP

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ULB- AABr Séance académique Les fonds de pension à l’aune de S-2

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  1. ULB-AABrSéance académiqueLes fonds de pension à l’aune de S-2 Karel Van GutteSecrétaire-Général Bruxelles, 14 Novembre 2011

  2. Agenda: • ABIP-BVPI-BAPI? • Objectifs de la CE et de l’EIOPA • Révision de la directive: enjeux et perspectives & S-2 vu par l’ABIP • Position des différents stakeholders

  3. ABIP-BVPI-BAPI? • 2° pilier: € 60 mia • € 44 miaassureurs • € 16 mia Fonds de Pension • € 15,6 mia ABIP-BVPI-BAPI • 240 Fonds de pension • Entre 3 et 300.000 bénéficiaires • 140 membre ABIP-BVPI-BAPI • 4 groupes

  4. Agenda: • BVPI-ABIP-BAPI? • Objectifsde la CE et de l’EIOPA • Révision de la directive: enjeux et perspectives & S-2 vu par l’ABIP • Position des différents stakeholders

  5. Objectives of EC & EIOPA (i) Rita Oomen-Ruijten(MP & reporter GP): • Prohibit early retirement • Enhance security of the pensions (=> S-2!) • Enhance “pension tracking systems” • Enhance mobility

  6. Objectives of CE & EIOPA (ii) Fritz von Nordheim(DG Employement) • “Pensions” become a Tier 1 priority(Lisbon Treaty => Europe 2020) • “Pensions” will be an important item in Green Paper • Important items: • Market exposure • Risk Sharing • Shock absorbtion

  7. Objectives of EC & EIOPA (iii) Gabriel Bernardino (EIOPA) Revision of the directive aims to: • Clarify (e.g. “cross border?”, “prudential,”, “scope?” • Incorporate all provisions in the directive • Offer comfort to the benificiaries by: • Uniform information • Cost efficient • Transparant investment principles

  8. Agenda: • ABIP-BVPI-BAPI? • Objectifsde la CE et de l’EIOPA • Révision de la directive: enjeux et perspectives & S-2 vu par l’ABIP • Position des différents stakeholders

  9. General conclusion BVPI • CfA: will provoke the end of DB plans & will threaten the pension funds in Belgium • Need for an own prudential framework • Apply some similar (not identical) principles on IORPs

  10. Solvency of the pension plan or pension fund? The answer of EIOPA does not take in consideration the socio-economical impact: • Increase in employers contribution; i.e. negative impact on the competiveness of the industry • Macro economical impact • Shift from DB to DC plans • …

  11. An IORP ≠ insurance company • IORP is a social institution • IORPs are not for profit • Sponsor engagement • No (internal) market / competition between institutions

  12. Some ideas of S-II are useful for IORPs … • General governance principles – taking in consideration the principle of proportionality • A realistic estimate of the pension liabilities • An explicit valuation of the “embedded options” • Clarity of differences with insurers

  13. … many ideas of S-II are not useful for IORPs: • Inherent tension between shareholder and beneficiary • Very complex to carry out • Accumulation of assumptions => insecurities • Capital structure: Notion external capital/own capital, Risk based capital

  14. … many ideas of S-II are not useful for IORPs: • IORPs have long term engagements, so fundamental differences with financial institutions • Pension plan managed via an IORP ≠ branch 21 insurance contract • Pro-cyclical / macro economic impact / systemic risk

  15. Some highlights (i): • SCOPE: • No distinction between undertaking & sponsoring undertaking • As broad as possible: all schemes in all countries • PRUDENTIAL REGULATION: • Proposal for an exhaustive list • If not => Home Member State

  16. Some highlights (ii): • RING FENCING: • Big need to clarify • Compulsary if financial strategy is not compatible • ACTUARIAL FUNCTION: • 3 Missions: plan / sponsor / overall • Need for common sense

  17. Some highlights (iii): • Holistic Balance Sheet: • “Best Estimate?” • Preference for ‘Risk Free” => Deutsche Bund: 1,8%? • “Sponsorcovenant?” • Valuation? • Funded? • Notification on sponsor’s balance sheet? • Opinion of revisor?

  18. Some highlights (iv): • Governance: • Proportionality • Fit and proper requirements may not obstruct the participation of members/beneficiaries • No whistle blowing by the compliance officer and the internal auditor

  19. Agenda: • Objectifs de la CE et de l’EIOPA • Révision de la directive: enjeux et perspectives & S-2 vu par l’ABIP • Position des différents stakeholders(européen & belge)

  20. Position des différentsstakeholders: Globaly: (EFRP-AEIP) • Reason to review is not justified and disproportional: broaden the scope while scope is not broadened • Encourage cross border activities is even more disproportional: 140.000 IORPs in EU & 84 PEPFs • More security for not-regulated systems; those systems remain excluded again=> best in class will suffer

  21. 3. Position des différentsstakeholders (i): Nederland: • S-2 on IORPs will provoke a shift to DC (CDC) • No consideration for national developments • No preliminary QIS before decisions • HBS is too complex, offers pseudo security, clarifies differences with insurers • Increase of costs with (est. 30%)

  22. 3. Position des différentsstakeholders (ii): Ireland: • S-2 on IORPs will provoke a shift to DC • Increase of costs (est. 40%)

  23. 3. Position des différentsstakeholders (iii): United Kingdom: • S-2 on IORPs will provoke a closure of DB’s • Increase of employers contribution (est. 50%) & no alternatives (automatic enrollment)

  24. Position des différentsstakeholders (iv): France: • Not under the scope of IORP, but under insurers directive (+S-2) • Strive to be under the scope of IORP-1 (!)

  25. Thank you for your attention Questions ? BelgischeVerenigingvoorPensioeninstellingen A. Reyerslaan 80 B-1030 Brussel Tel. : 02/706.85.45 - Fax : 02/706.85.44 E-mail: info@pensionfunds.be www.pensionfunds.be

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