ULB-AABrSéance académique

Les fonds de pension à l’aune de S-2

Karel Van GutteSecrétaire-Général

Bruxelles, 14 Novembre 2011

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Agenda:

1. ABIP-BVPI-BAPI?2. Objectifs de la CE et de l’EIOPA3. Révision de la directive: enjeux et

perspectives & S-2 vu par l’ABIP4. Position des différents stakeholders

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ABIP-BVPI-BAPI?

• 2° pilier: € 60 mia– € 44 mia assureurs– € 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 groupes3

Agenda:

1. BVPI-ABIP-BAPI?2. Objectifs de la CE et de l’EIOPA3. Révision de la directive: enjeux et

perspectives & S-2 vu par l’ABIP4. Position des différents stakeholders

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Objectives of EC & EIOPA (i)

Rita Oomen-Ruijten (MP & reporter GP):

1. Prohibit early retirement2. Enhance security of the pensions (=>

S-2!)3. Enhance “pension tracking systems”4. Enhance mobility

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Objectives of CE & EIOPA (ii)

Fritz von Nordheim (DG Employement)1. “Pensions” become a Tier 1 priority

(Lisbon Treaty => Europe 2020)2. “Pensions” will be an important item in

Green Paper

3. Important items:1. Market exposure2. Risk Sharing3. Shock absorbtion

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Objectives of EC & EIOPA (iii)

Gabriel Bernardino (EIOPA)

Revision of the directive aims to: 1. Clarify (e.g. “cross border?”, “prudential,”,

“scope?”2. Incorporate all provisions in the directive3. Offer comfort to the benificiaries by:

1. Uniform information2. Cost efficient3. Transparant investment principles

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Agenda:

1. ABIP-BVPI-BAPI?2. Objectifs de la CE et de l’EIOPA3. Révision de la directive: enjeux

et perspectives & S-2 vu par l’ABIP

4. Position des différents stakeholders

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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

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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- …

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Solvency of the pension plan or pension fund?

An IORP ≠ insurance company

• IORP is a social institution• IORPs are not for profit• Sponsor engagement• No (internal) market / competition

between institutions

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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

… 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

… 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

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

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

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?

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

Agenda:

1. Objectifs de la CE et de l’EIOPA2. Révision de la directive: enjeux et

perspectives & S-2 vu par l’ABIP3. Position des différents

stakeholders(européen & belge)

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Position des différents stakeholders:Globaly: (EFRP-AEIP)

1. Reason to review is not justified and disproportional: broaden the scope while scope is not broadened

2. Encourage cross border activities is even more disproportional: 140.000 IORPs in EU & 84 PEPFs

3. More security for not-regulated systems; those systems remain excluded again=> best in class will suffer

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3. Position des différents stakeholders (i):

Nederland:1. S-2 on IORPs will provoke a shift to DC

(CDC)2. No consideration for national

developments3. No preliminary QIS before decisions4. HBS is too complex, offers pseudo

security, clarifies differences with insurers

5. Increase of costs with (est. 30%)

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3. Position des différents stakeholders (ii):

Ireland:1. S-2 on IORPs will provoke a shift to DC 2. Increase of costs (est. 40%)

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3. Position des différents stakeholders (iii):

United Kingdom:1. S-2 on IORPs will provoke a closure of

DB’s2. Increase of employers contribution (est.

50%) & no alternatives (automatic enrollment)

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Position des différents stakeholders (iv):

France:1. Not under the scope of IORP, but under

insurers directive (+S-2)2. Strive to be under the scope of IORP-1

(!)

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Thank you for your attention

Questions ?

Belgische Vereniging voor PensioeninstellingenA. Reyerslaan 80B-1030 BrusselTel. : 02/706.85.45 - Fax : 02/706.85.44E-mail: info@pensionfunds.bewww.pensionfunds.be