The target of supervisory disclosure is to facilitate a uniform standard of transparency and responsibility of supervisory authorities. Publicised information should be easily accessible and comparable. For this reason, corresponding legal requirements that have to be adhered to by the FMA were created under IORP II. The FMA’s disclosure obligations are defined in Article 33i of the Pensionskassen Act (PKG – Pensionskassengesetz). In order to comply with these requirements the FMA hereby discloses information regarding the following thematic areas:
Laws and administrative regulations with regard to IORP II are assigned to two different levels: the level of the IORP II Directive and the Level Monitoring of national implementation measures
The IORP II Directive (Directive of the European Parliament and of the Council on the activities and supervision of institutions for occupational retirement provision (IORPS) (recast) aims at minimum harmonisation and is therefore not intended from precluding Member States from maintaining or introducing stricter provisions, in order to protect members and beneficiaries of occupational pension schemes, provided that such provisions are consistent with Member States’ obligations under Union law. The Directive does not concern issues of national social, labour, tax or contract law, or the adequacy of pension provision in Member States. The IORP II Directive has been transposed in Austrian by the amendment to the Pensionskassen Act (PKG; Pensionskassengesetz) of 30 November 2018, published in Federal Law Gazette I No. 81/2018, which entered into force on 01.01.2019.
Pensionskassen Act (PKG)
The European Commission monitors – with support from EIOPA – national measures for implementation as well as supervisory practices. A contribution is thereby may to supervisory convergence and the effective enforcement of Union law.
Reporting requirements to the European Central Bank
Regulation (EU) 2018/231 of the European Central Bank of 26 January 2018 on statistical reporting requirements for pension funds (ECB/2018/2), OJ L 45 of 17.02.2018
EIOPA Regulation (EU) No. 1094/2010 – establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), EIOPA
The FMA shall monitor the adequacy of strategies, processes and reporting procedures used by Pensionskassen with regard to their compliance with with applicable regulations regarding Pensionskassen business. The FMA shall in particular assess the qualitative requirements in relation to the governance system, the risks that the Pensionskasse is exposed to or could be exposed to, as well as the ability of the undertaking to be able to assess such risks while taking into consideration the prevailing business environment. The following topic areas are at the centre of the Supervisory Review Process: 1. Governance system, including the Own Risk and Solvency Assessment and investment rules; 2. Technical provision; 3. Solvency Capital Requirement and Minimum Capital Requirement; and 4. Quality and Quantity of Own Funds. Furthermore the adequacy of the methodologies and practices of Pensionskassen are also assessed that are of use for determining potential events or changes in economic conditions, which could have a detrimental effect on the general financial ability to perform of the respective undertaking. The ability of Pensionskassen to absorb such potential events or changes in economic conditions is also analysed. Depending on the results of this assessment, supervisory measures will be taken.
The Supervisory Review Process is generally split into the following three phases: 1. Categorisation of risks 2. Detailed review 3. Supervisory measures
Phase 1 – Categorisation of risks
For the categorisation of risks and impacts, both the information submitted both as part of regular reporting requirements, as well as additional national reporting requirements under the regulation on reporting by Pensionskassen, are taken into account. These reports are, among other things, used to generate risk and early warning indicators. The results of stress tests, time series analyses, comparisons between undertakings or relevant peer groups and other issue-related analyses are also considered in assessments. Further examples of elements that are taken into account are indications from other supervisory authorities and analyses of the general and Pensionskassen-specific market environments as well as the market behaviour of individual undertakings. For the classification of the respective undertaking all of this data, which is assessed in a largely standardised manner at first, is complemented with additional qualitative observations (e.g. from a regular dialogue with representatives from the undertaking). Within the risk classification, the FMA identifies and assesses the ability of the undertaking to be able to react appropriately to or withstand current or potential future risks. The risk profile is compared against the respective risk bearing capacity. In the case of impact classification, the impact of default on both the beneficiaries and the market are assessed. For example, among other factors, the size of the undertaking (e.g. amount of technical provisions and contributions) determines the impact classification. Such risk and impact classifications are transposed into four risk and impact classifications ranging from “low” to “very high”. The intensity of supervision for the coming year is defined in this way. The supervisory plan, determining the frequency and the intensity of the supervisory activities for every undertaking, based on the assignment of undertakings to respective supervisory levels, is determined on a risk-based approach. The frequency and intensity of the activities conducted by the supervisory activities for every undertaking are determined in the supervisory plan.
Phase 2 – Detailed review
Detailed reviews take place on the basis of the supervision plan in the form of location-independent analyses and on-site inspections . The FMA’s planned thematic priorities for inspections have been published for the year ahead since the package of measures in relation to the “Supervisory Reform 2017” entered into force.
Phase 3 – Supervisory measures
Weaknesses, as well as existing or potential deficiencies, or infringements against requirements may lead to supervisory measures being set. The initiation of such measures is commensurate to the detected deficiencies. A review of the implementation of measures in the undertaking is conducted by the FMA and the supervision plan is updated in accordance with the effectiveness of the activities conducted in the undertaking concerned.
Aims of supervision
The main of supervision is to protect the rights of members and beneficiaries of occupational pension schemes and to ensure the stability and soundness of IORPs. Irrespective of this aim, the FMA shall duly consider in the performance of its tasks the potential impact of its decisions on the stability of the financial system in all EEA Member States concerned and, in particular, in emergency situations, based on the information available at the relevant time. In times of exceptional movement in the financial markets the FMA shall take the potential procyclical effects of the measures that it deploys into account.
Main functions of supervision
The FMA monitors all business performed by Pensionskassen within the scope of the licence granted pursuant to Article 8 para. 1 PKG. The FMA’s supervisory activities must be both risk-based and forward looking. The orderly functioning of Pensionskassen business and compliance with the regulations applicable for the operation of Pensionskassen, in particular those set forth in the PKG, form the central focus of supervisory activities. In so doing the FMA ensures that there is an appropriate combination of location-independent activities and on-site inspections. In exercising its powers, the FMA takes into account the nature, scope and complexity of the risks that arise from the business activity of the Pensionskassen.
Main areas for ongoing or planned supervisory activity
The supervision of Pensionskassen involves the exercising of official tasks and powers defined in the Pensionskassen Act (PKG – Pensionskassengesetz), in the Company Pension Act (BPG – Betriebspensionsgesetz) and the SFT Enforce Act (SFT-Vollzugsgesetz) and which have been assigned to the FMA. Details about supervisory activities may in particular be found in the FMA Annual Reports as well as the FMA’s Focuses on Supervision and Inspections.