The Holistic Balance Sheet: A Different European Approach for Pension Funds?

Erwin Fransen, Niels Kortleve

The European Commission (EC) is not only working on improving supervision of insurance companies (Solvency II), it also intends to modernise the Institution for Occupational Retirement Provisions (IORP) directive. The existing IORP directive is seen as minimum harmonisation, leaving much room for member states to set supervisory regulation and to accommodate the diverse European pension landscape. On March 27, 2014, commissioner Barnier (internal market and services) published the proposal for IORP II (see European Commission, 2014). With IORP II, the EC aims to: (i) stimulate cross-border pension activity; (ii) harmonise risk-based frameworks for IORPs; and (iii) increase the consistency with other risk-based frameworks. The plan for IORP II does not include proposals for capital requirements (Pillar I) for IORPs, but only for Pillars II and III (governance and transparency). However, proposals for new capital requirements for IORPs are foreseen in a future version of the IORP directive. The EC have already commissioned the European supervisor on insurance and occupational pensions, EIOPA, to continue working on capital requirements for IORPs.11The focus in this chapter is on

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