The EU and the application of Solvency II to Pensions – the role of the Pensions Regulator Will Price – The Pensions Regulator Actuarial Profession Solvency II Open Forum 4 March 2008

The decision making process  Stage one: Commission proposal  Stage two: European Parliament and Council  Stage three: Act adopted  Stages four and five: Implementation and monitoring compliance

Future Plans for Pensions Solvency  Pressure  Recent comments, call for advice?  “a very strong business case would be required before we start shifting Solvency II rules to pension funds, and frankly, I would be surprised if there is such a case” (Charlie McCreevy)  Broad Consultation  UK effect (Punter Southall)  “Moving to a solvency regime could cause an increase in liabilities of around 90%”

CEIOPS  Level 3 of the Lamfalussy process  TPR and FSA represented in CEIOPS  Key work program:  Review of the IORP  Solvency for pensions  Cross border provisions

Occupational Pensions Committee  Initial review of key aspects of the implementation of the IORP directive  Solvency Sub-Committee (SSC)  Basis of the work  Report on Technical Provisions and Security Mechanisms  Future work

Two archetypes in Europe  Article 17  Buffers  Employer support  Contingent assets  Guarantee Funds

Two archetypes in Europe Buffers Netherlands Austria Belgium (circa 75%) Denmark Germany France Sweden Sponsor backed UK Ireland Luxembourg Belgium Malta Portugal

Stakeholder involvement  Departmental stakeholders  Industry/commercial stakeholders  European/CEIOPS stakeholders

Source: OECD

Questions?