The European Insurance and Occupational Pensions Authority (EIOPA) should be addressing more pressing issues than a solvency system for pensions, according to the National Association of Pension Funds (NAPF).

EIPOA's consultation document identifies a number of areas where it believes further work is necessary to improve clarity on the Holistic Balance Sheet and on how it could be used in practice.

However, NAPF chief executive Joanne Segars believes that the organisation should be prioritising other areas.

She said: "We are very disappointed that EIOPA has chosen to press ahead with this work on solvency for pensions.

"There are far more pressing challenges that it should be addressing, for example the new European Commission is focusing on encouraging long-term investment, the proposed IORP Directive aims to strengthen governance and communications, and the industry is working hard to deliver good value and high quality pensions.

"By pursuing the Holistic Balance Sheet project, which has been widely opposed – and for which it has no mandate from the European Commission, EIOPA risks being left behind at a time when the rest of the pensions world has moved on.

One area EIOPA has identified for improvement is the valuation of sponsor support, but NAPF believes this to be a bad move.

"It would be a mistake to try to put a single numerical value on sponsor support as this is a complex concept that requires a rounded assessment to ensure trustees fully understand the extent to which they can rely on the sponsor's backing and the risks associated with it," said Segars.

The NAPF's consultation response also argues that if EIOPA's plans were to go ahead, they should apply to future accruals only and there should be a long transition period before any implementation, in order to mitigate the impact of the Holistic Balance Sheet-based funding system.

"If EIOPA were to persuade the European Commission to go ahead with the Holistic Balance Sheet, then the best option would be to use it as a risk management tool, rather than as a new funding regime," said Segars.

"The NAPF recognises that EIOPA has responded to previous rounds of consultation by including options for principles-based approaches and more flexible implementation at a national level, which is welcome and we hope they will listen again.

"There is no case for a single, pan-EU system."

First published 15.01.2015

Lindsay.sharman@wilmington.co.uk