PensionsEurope welcomes the opportunity to comment on the IFRS Foundation Exposure draft (ED) which proposes amendments to the IFRS Foundation Constitution that would enable the creation of a new sustainability standards board under the governance of the Foundation. PensionsEurope believes that broadening the scope of the IFRS to include non-financial / sustainable reporting standards is a step in the right direction both from the perspective of international companies as well as pension funds. Considering that the IFRS sets international accounting and reporting standards, this can ensure comparability in this area between different jurisdictions.
PensionsEurope welcomes the initiatives and the proposed amendments and will continue monitoring the new relevant developments and initiatives. You can read our comments here.
PensionsEurope submitted its feedback on the proposal of the EU Corporate Sustainable Reporting Directive (CSRD). IORPs as investors are users of the data which companies will be required to provide under the legislative proposal for a Corporate Sustainability Reporting Directive.
PensionsEurope is pleased that the intention is to create consistency between the Taxonomy Regulation and the Sustainable Finance Disclosure Regulation (SFDR) on the one hand and the Corporate Sustainability Reporting Directive and the future sustainable reporting standards on the other.
We welcome the clear link with the SFRD in the CSRD proposal. The SFRD introduces reporting requirements on principal adverse impacts (PAIs) along with a broad set of 18 quantitative and qualitative indicators. Therefore, the financial sector essentially is required to report on information that does not yet need to be made public by companies. This means that pension funds will need to obtain information, partially based on estimates, from specialized data providers. As a result, data sets can diverge significantly and come at a significant cost.
For the implementation of the responsible investment policy and own reporting obligations under the SFDR, pension funds need information on the companies they invest in across the spectrum of asset categories. The majority of these investments are in listed companies that would have already been subject to reporting under the NFRD, but some other investments may be brought in scope. This applies to private equity investments and smaller listed companies. It is good to note that a very significant share of investments is located in the US or emerging markets and these will remain out of scope.
We welcome the extension of the scope as it helps to develop responsible investment strategies in areas where data may still be lacking, such as private equity. At the same time, broad coverage of companies should not come at the expense of the depth of information.
To conclude, PensionsEurope supports the introduction of the European Single Access Point and we support the proposal’s requirement for the limited assurance of sustainability reporting. You can read our feedback here.
PensionsEurope welcomes the EC Communication which aims to take next steps in the EU Sustainable Finance Strategy. Private finance has an important role to play in the recovery from the COVID pandemic and in the transition to a sustainable economy.
The new strategy is calling for the publication of a report for activities which sounds like a “brown taxonomy”. PensionsEurope believes that while a brown taxonomy would provide further indications concerning environmental risks, its development might produce negative consequences, especially if not complemented by consistent indicators promoting the greening of enterprises.
Pension Funds also worry on how double materiality may be regulated. The IORP II Directive already requires IORPs to consider ESG risks and disclose information to current and prospective. PensionsEurope believe that the IORP II Directive clarifies that the measures should be proportionate to the nature, scale and complexity of the IORP. Any EU action has to be in accordance with the principle of proportionality and it would also be preferable for any action to take first into consideration the upcoming revision of the IORP II Directive. You can read our press release here
In our input to EIOPA, we find it important that financial entities can be unequivocally identified, and we agree that it would be useful to have one worldwide identifier for that purpose. PensionsEurope would like to thank EIOPA for having considered proportionality in its draft guidelines on the use of Legal Entity Identifier, and we agree with the EIOPA proposal.
In general, we find proportionality of the utmost importance when introducing any new requirements to IORPs. Particularly the current low/negative yield environment has made small IORPs very sensitive to any additional fixed costs, on top of the already existing investment, administration, governance, and communication costs.
Today, the PensionsEurope Board of Directors accepted Svensk Försäkring (Insurance Sweden) as its newest member. Svensk Försäkring is the industry organisation for insurance and occupational pensions companies in Sweden. They have about 50 member companies representing more than 90 percent of the Swedish insurance and occupational pensions market. Recent developments in the Swedish occupational pensions market due to the Swedish implementation of the IORP II Directive have triggered the decision by Svensk Försäkring to join PensionsEurope. Read more in our press release here.
In our input to the European Commission Roadmap on supervisory data strategy, PensionsEurope thanks the Commission for a good and constructive dialogue over the past years on our concerns and suggestions. As a direct follow-up to the fitness check, PensionsEurope also welcomes the EC roadmap on supervisory data strategy, and we would be happy to provide our technical expertise to the Commission how the strategy could be best implemented regarding pension funds.
PensionsEurope input contains several concrete suggestions to the Commission. We also suggest to the Commission to consider how the EU data strategy could reflect on the good work done by FinDatEx. PensionsEurope has recently joined FinDatEx and its ESG workstream to try to reduce the reporting costs and burden to pension funds e.g. by creating the European ESG Templates.
Today, PensionsEurope has launched European Retirement Week with 8 other European associations. With the European Retirement Week, which is to become a recurring event on the European calendar, the associations aim to provide a platform for a wide range of stakeholders to debate the future of pensions in Europe and to raise citizens’ awareness of the need to save for retirement. This year's edition will take place in the week of 29 November 2021 and will be organised online given the continuing uncertainty surrounding the COVID-19 pandemic.You can read our press release here.
In our input to the European Commission, PensionsEurope supports a balanced approach to the convergence of capital market supervision. PensionsEurope believes that a vibrant Capital Markets Union, which provides European pension funds with long-term investment opportunities to achieve good returns for members and beneficiaries, requires robust supervision of market participants. Occupational pensions are still very divergent across member states, both in terms of their prevalence and design. They are closely linked to first pillar pensions, as well as social and labour law more broadly. Importantly, the strong link between occupational pensions and national tax and labour law has resulted so far in relatively limited cross-border activities of IORPs. For these reasons, the rationale for a bigger regulatory or supervisory role for EIOPA on IORPs is absent. Nonetheless, we have seen a clear impact of EIOPA on the regulatory framework. Both EIOPA’s own Opinions and its work on Level 2 in the area of insurance have a significant impact on the supervisory activities of National competent Committees across Europe.Finally, since its inception, the mandate of ESMA has been expanded significantly, particularly in areas with strong financial stability or cross-border aspects. Pension Funds have supported the strengthening of this mandate.However, PensionsEurope believes that ESMA faces challenges due to the EU framework’s persistently poor design.
In its position paper, PensionsEurope welcomes the efforts of the EU to increase the digital operational resilience of the financial sector and we recognise the importance of enhancing knowledge sharing and cooperation across the EU. We agree with the importance of a sound governance and risk management system to prevent and limit the impact of ICT-related incidents, disruptions, and threats.
We recognise that the financial sector is not homogeneous: as also the EC has correctly noted, significant differences exist between various financial entities in terms of size, business profiles and in relation to their exposure to digital risk meaning that also the consequences from cyber risks and ICT-related incidents faced by various financial entities differ greatly from one entity to another.
PensionsEurope believes that it is crucial that the specificities of IORPs are better reflected in the DORA requirements and that IORPs could at least benefit from a more proportional treatment in this context, thus not jeopardizing the societal goal of IORPs to provide an adequate pension income for their members and beneficiaries.
In our input to the European Commission, PensionsEurope supports the Commission’s objective to simplify the life of taxpayers operating in the single market and we welcome the review of the VAT rules. In general, we believe all pension fund participants should be protected from unnecessary VAT burdens, regardless the character of the schemes as well as the Member State in which the services are being received. The current exemption for special investment funds should be extended to all pension schemes.
Even though the VAT exemption is in place, in some countries there is a stamp duty (for instance 4%) that is not subject or exempt from VAT and there is no possibility of any deduction. We urge the EC to recommend Member States to exempt (at least) pension schemes from this duty (or decrease their duty to no more than 1%).
Finally, we believe that establishing a cross-border investment-friendly tax environment in the EU not only requires removing unfair tax treatment but also introducing tax incentives.