On 22 November 2024, PensionsEurope answered the EC’s consultation on assessing the adequacy of macroprudential policies for Non-Bank Financial intermediaries (NBFIs).
In our answer, we explained that IORPs have limited connection with other financial and their ability to trigger systemic risks is very small. Pension funds are long-term investors with very predictable liabilities. They provide stability, rather than instability, to the financial system. Based on that, IORPs should not be treated as NBFIs given their social role and how they are regulated. The insolvency of pension funds is an improbable event.
The risk management and governance of pension funds are adequate to deal with any potential liquidity risk as well. Regular liquidity risk assessments relating to derivative portfolios are alread part of the treasury function and risk-management processes for IORPs.
Proportionality is key to avoiding a major impact on investment returns and pensions.
Comments received by the EC on that consultation will feed EC thinking into potential new initiatives for the new 2024-2029 mandate.
