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
Level IORP II Directive
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.
- Directive (EU) 2016/2341/EU
Pensionskassen Act (PKG)
Level Monitoring of National Implementation Measures
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.
- FMA Regulations on the basis of the PKG
- FMA Minimum Standards
- FMA Circulars
- FMA Guides
Other legal acts in the field of Pensionskassen regulation
- published: 22.10.2014
- Implementation: FMA: compliant
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
- Rating Agencies Enforcement Act (RAVG – Ratingagenturenvollzugsgesetz)
- Act on the Enforcement of the Securities Financing Transactions Regulation (SFT-Vollzugsgesetz)
- Financial Markets Anti-Money Laundering Act(FM-GwG – Finanzmarkt-Geldwäschegesetz)
EIOPA Regulation (EU) No. 1094/2010 – establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), EIOPA
EIOPA Opinions published on 07.10.2021
- Opinion on the supervisory reporting of costs and charges of IORPs
The Opinion sets out expectations on the supervisory reporting of costs and charges of IORPs
- Opinion on the supervision of risk assessment by IORPs providing DC schemes
The supervisory approach to DC products needs to ensure that risks borne by DC IORPs are appropriately monitored and managed. The Opinion fosters consistent supervisory practices by providing guidance on two aspects of risk management by DC IORPs. Firstly, the Opinion calls for a greater use of quantitative elements when managing operational risks, supplementing EIOPA’s existing opinion. Secondly, it expects DC IORPs to conduct long-term risk assessments by using projections of members’ future retirement income, comparing the results with the established risk tolerance of the members and beneficiaries, and as appropriate considering the IORP’s investment strategies.
EIOPA Opinions published on 10.07.2019
- The Opinion on the use of governance and risk assessment documents in the supervision of Institutions for Occupational Retirement Provisions (IORPs)
Templates on the own-risk assessment documents
In this opinion EIOPA sets out its expectation about how institutions for occupational retirement provision (IORPs) should conduct their Own Risk Assessment (ORA), as well as the minimum content of the ORA report. In so doing EIOPA also states how the documentation in question should flow in the supervision of investment policies (incl. the principles of the investment policy).
- The Opinion on the practical implementation of the common framework for risk assessment and transparency for Institutions for Occupational Retirement Provisions (IORPs)
Principles and Technical Specifications for the Common Framework
The Common Framework (CF) is a useful risk management tool from EIOPA’s perspective and therefore should be deployed accordingly in the supervised entities. This is particularly the case where risks that are split between employers, beneficiaries and the IORP itself. IORPs, which offer “pure DC schemes” (where all risks are borne by the beneficiaries) are not captured by this opinion.
The CF contains comprehensive principles and technical specifications, which may be used by the supervisory authorities and by the IORPs on a voluntary basis.
- The Opinion on the supervision of the management of operational risks faced by Institutions for Occupational Retirement Provisions (IORPs)
EIOPA wishes to contribute towards ensuring harmonised supervisory practices in relation to operational risk. This opinion therefore also covers outsourcing and cyberrisks. The assessment of operation is also part of the ORA and should therefore in any case also contain forward-looking information.
EIOPA orients itself towards Solvency II in terms of definitions. Operational risk is defined as the risk of loss arising from inadequate or failed internal processes, personnel or systems, or from external events. Operational risks include compliance/legal risks, but exclude risks arising from strategic decisions as well as from reputational risks.
- The Opinion on the supervision of the management of environment, social and governance risks faced by Institutions for Occupational Retirement Provisions (IORPs)
From EIOPA’s perspective, IORPs have a social purpose and should therefore adopt a pioneering role in taking into account ESG factors. In so doing the impact of long-term investment decisions and activities are to be taken into account. The opinion clearly shows the relationship between ESG risks and traditional ones.
- Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector (SFDR)
- Delegated Regulation (EU) 2022/1288 supplementing SFDR
- Directive 2014/95/EU as regards disclosure of non-financial and diversity information (NFDR)
- Proposal for a Directive amending corporate sustainability reporting (CSRD)
- Taxonomy Regulation (EU) 2020/852
- Delegated Regulation 2021/2178
- Delegated Regulation 2022/1214
- EIOPA Advice on the integration of sustainability risks and factors in Solvency II and IDD
- EIOPA Opinion on Sustainability within Slvency II
- EIOPA Report on non-life underwriting and pricing in light of climate change
- EIOPA Opinion on the supervision of the use of climate change risk scenarios in ORSA
- Delegated Regulation (EU) 2021/1257 as regards the integration of sustainability factors, risks and preferences into the POG requirements and into the rules on conduct of business and investment advice for insurance-based investment products
- EIOPA Guidance on the integration of sustainability preferences in the suitability assessment under the IDD
- Regulation (EU) 2022/2554 on digital operational resilience for the financial sector (DORA)
- Proposal for Artificial Intelligence Act (AIA)
- EIOPA Consultation Paper on differential pricing practices
Aims of the Supervisory Review Process
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.
Criteria and methodologies of the individual phases of the Supervisory Review Process
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.