The European Insurance and Occupational Pensions Authority (EIOPA) has suggested that the European Commission’s (EC) upcoming review of the IORP II Directive should take greater consideration of proportionality around governance issues.

Speaking at the Cross-Border Benefits Alliance (CBBA) Europe Annual Conference 2022 yesterday, 15 September, EIOPA executive director, Fausto Parente, outlined a number of areas that could be improved in the directive, following the EC’s call for technical advice to EIOPA in June 2021.

In particular, Parente argued that issues such as proportionality need to be tackled, arguing that it is something that needs to be looked into in more detail.

“For our members, that's one of the main issues,” he continued. “The main problem with the present directive is that there's not enough consideration of proportionality in governance, in various requirements."

In addition to this, Parente argued that while IORP II is an “adequate framework”, some of the main objectives have not been achieved, mainly the cross-border issue, suggesting that there is “clearly a need for some adjustments” within the directive itself.

“The cross-border issue definitely hasn’t worked. Social labour relations, taxation issues are real,” he said.

He also raised concerns around the shift from defined benefit (DB) to defined contribution (DC) schemes, noting that the first directive was really focused on DB schemes, warning that a shift to pure DC could prove “problematic” for information provision and governance issues, as the risks are borne by the member, rather than the sponsor.

Share Story: