Nine of the 27 recommendations on the application of the prudent person rule for iorps, according to the IORP II requirements, have not been fulfilled, the European Insurance and Occupational Pensions Authority (EIOPA) has said.

The authority has published a follow-up report to the 2019 peer review on the application of the prudent person rule for iorps according to the IORP II requirements.

Iorps are required to invest their capital in the best interest of members and beneficiaries and respect specific investment rules. The report assessed how national competent authorities (NCAs) implemented the recommended actions identified in 2019.

“The 2019 peer review issued 27 recommendations across seven areas to 28 NCAs. Of these, eight recommendations were fully fulfilled, 10 were partially fulfilled but nine were not fulfilled,” EIOPA stated.

Recommendations regarding the application of look-through methodology, when iorps are investing in collective investment vehicles, have been predominantly addressed. However, recommended actions regarding the assessment of the governance of the investment process and the use of the on-site inspections have not been fulfilled. In other areas compliance is mixed, EIOPA noted.

“Implementation of recommended actions often depended on the implementation status of the IORP II Directive. For those NCAs still transitioning to a risk-based approach, some of the secondary legislation and development of supervisory practices still need to be implemented and this has an impact on the status of the fulfilment of recommended actions or implementation of best practices.

“Among the reasons for non-fulfilment of the recommendations were lack of resources and other priorities.”

EIOPA is inviting NCAs that have not yet fulfilled the recommended actions to consider the identified best practices as inspiration for the development of their national supervisory practices. The authority said it will continue to closely monitor the implementation of the recommended actions.

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