The European Insurance and Occupational Pensions Authority (EIOPA) has said that it is closely monitoring the capital and liquidity position of IORPs amid the ongoing economic turmoil.

Speaking at a hearing of the Economic and Monetary Affairs Committee of the European Parliament, EIOPA chairperson, Petra Hielkema, said the authority was using all of its instruments to monitor the situation.

Hielkema noted that while the impact on the occupational pensions sector had been “minimal”, second round effects were becoming increasingly visible, with consumers facing a cost-of-living crisis.

She described sustainability as a “key factor” in pensions and revealed that EIOPA would soon be releasing the results of its stress test of the European occupational pensions sector against a climate change scenario.

Furthermore, sustainability will be one of the areas addressed in the authority’s IORP II review.

On digitisation, Hielkema said that many of the innovations it was seeing would help close some protection gaps, but only if there was appropriate supervision.

Meanwhile, in regard to resilience, cyber insurance and the implementation of the Digital Operational Resilience Act remained priorities.

“To meet future challenges, we should consider the importance of regulation, the limits of supervision, and the importance of good cooperation, Hielkema continued.

“Just as we need to review our regulatory frameworks, we should also review our supervisory toolkit.

“This year, we adopted our first breach of union law recommendation against a national competent authority for the incorrect application of union law. This recommendation followed a lengthy process in which we exhausted all options available from our existing supervisory tools.

“The case has been escalated to the commission which adopted a formal opinion based on our recommendation. Nonetheless, it has taken too long to resolve this case and during this time we have not been able to take any direct action to protect policyholder interests.

“We should therefore consider how we update our supervisory framework.”

Hielkema also highlighted the need for good cooperation, which she described as a powerful tool in the face of any risk.

“Here I would like to underline the good cooperation that we have with the European Commission and the European Parliament,” she said.

“A final word on our new strategy. It is an evolution designed to strengthen the resilience and sustainability of the insurance and pensions sectors, building on our strong foundation.”

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