EUROPE – The European Association of Paritarian Institutions (AEIP) has called on the European Insurance and Occupational Pensions (EIOPA) to clarify what role the holistic balance sheet (HBS) will play within the revised IORP Directive.

In response to the final report on the first quantitative impact study (QIS) for the revised IORP Directive released last week, the AEIP welcomed EIOPA's acknowledgment that the final outcome of the QIS should be treated "with caution".

However, the association said it "regretted" the lack of information provided by EIOPA on the HBS approach, arguing that the Frankfurt-based authority had failed to shed any light on the matter.

"It is still not clear whether the HBS will be used to assess the solvency level of a given IORP, or whether it will serve as an internal tool for better-informed management," the AEIP said.

Additionally, the association argued that the first QIS for the revised IORP Directive had been "biased" by several methodological issues, "heavily hampering" the comparability of the results collected.

According to the association, instead of providing clear insight on the impact the HBS would have on occupational pensions, the QIS actually showed that the HBS approach "cannot work and should be handled with care".

"Although it is an intellectually appealing concept, it does not represent an opportunity," it said.

The AEIP stressed that any further step in this direction would require "more analysis" and a "thorough assessment" of costs and benefits.

It finally went on to say that the first QIS highlighted the challenge of creating a harmonised supervisory framework for pensions at the EU level.

It said this was due to the nature of the pension promise and the various adjustment and steering mechanisms, which are often grounded in social and labour law.

EIOPA sent its preliminary results on the outcome of the first QIS to the European Commission in April this year.  

The first QIS exercise, which ran between October and December last year, aimed to assess the impact of the potential implementation of an HBS accounting approach within the IORP II Directive.

The exercise also aimed to assess the quantification of the security and benefit adjustment mechanisms existing in different EU member states.