Ομιλία - Παρουσίαση: Justin Wray, Head of Policy Department, European Insurance and Occupational Pensions Authority (EIOPA)

1. THE NEW DEMANDING INVESTMENT
ENVIRONMENTAND THE APPLICATIONOF ESG
CRITERIAIN OCCUPATIONALFUNDS’
INVESTMENTSTRATEGIES
Presenter:Justin Wray
Department:PolicyDepartment
Date:23 February2022
EIOPA REGULAR USE

2. COVERAGE
 Pensionfundinvestments
 RecentEIOPA activitieson pensions
 Observationson Greek occupational pensions
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3. WHY PENSION FUND INVESTMENT MATTERS?
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Source: Final Report, submitted to European Commission & Financial Services User Group
under the tender: Who owns the European economy? Evolution of ownership of EU-listed
companies between 1970 and 2012, page 4.
MARKT/2012/077/H
Breakdownof Investmentfunds/shares – EU-wide Q3 2021

4.  For IORPs - included in the Directivebut not mandatory
Article 19(1)(b) IORP II:”within the prudent person rule, Member States shallallow IORPs to take into account
the potential long-termimpact of investmentdecisions on environmental, social, and governance factors”
 For PEPP providers - included in the PEPP Regulation Proposal as mandatory
Article 41(1)(b) PEPP Regulation: “within the prudent person rule, PEPP providersshall take intoaccount risks
related to and the potential long-termimpact of investment decisions on ESG factors”
WHAT ARE THE ESG REQUIREMENTS AT EUROPEAN LEVEL ON
PENSION FUND INVESTMENTS?

5. WHAT ARE THE NEXT STEPS?
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“Ask EIOPA to assess the need to
review the fiduciary duties of pension
funds and investorsto reflect
sustainabilityimpacts as part of
investmentdecision making
processes,including stewardshipand
engagementactivities by 2022”
Source: EuropeanCommission,Strategy forFinancing the Transition to a Sustainable
Economy,6 July 2021

6. WHAT ARE THE ISSUES TO CONSIDER? (I) DOUBLE
MATERIALITY’

7. WHAT ARE THE ISSUES TO CONSIDER? (II) PRUDENT PERSON
RULE
 Insurance: changes to the prudentpersonprinciple:
 Integration of sustainabilityrisksinthe prudentpersonprinciple.
“When identifying,measuring,monitoring,managing,controlling,reportingandassessingrisksarising from investments,as
referredtoin the firstsubparagraphof Article 132(2) of Directive 2009/138/EC, insurance and reinsurance undertakings
shall take into account sustainabilityrisks. “[italicsadded]
 Article 275A SolvencyII delegatedregulation
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8. WHAT ARE THE ISSUES TO CONSIDER? (III) DISCLOSURE
 The Sustainable Finance Disclosure Regulation(SFDR)requires IORPsto disclose and act on their
environmentaland socialmateriality ina standardiseddue diligence statement onPrincipal Adverse
Impacts:
 on a “comply or explain” basis forIORPs< 500 employees.
 Disclosure onthe impact of investments on: energy efficiency,GHGemissions,gender diversity on boards
 All pension schemes to disclose onthe manner they integrate sustainability risksininvestment decisions
 The SFDR aims at preventinggreenwashing,by bringing in harmonisedrequirements,requiring pension
schemes,pensionproducts and PEPPs with a sustainability ambition to disclose ontheir sustainability
features,includinginformationon whetherinvestments are Taxonomy-aligned
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9. RECENT EIOPA ACTIVITIES ON PENSIONS
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10. BENEFITS TO A EUROPEAN APPROACH ON PENSIONS
 Internal market
 Labour mobility
 Sources of capital
 Member protection
 Transparency
 Force for improvement
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11. OPINION ON COSTS AND CHARGES
 NCAs are expectedto collect annual informationfromIORPs oncosts
 using generic classification:investment costs,transactioncosts,administrative costs andcosts borne
directly by sponsors
 templates to assist NCAs andIORPs to collect costs
 NCAs shouldexpect IORPs to followa number of principles in compiling the cost information,most notably
the look-throughprinciple
 NCAs are expectedto conduct comparativeanalysis ofIORPs’costs to feedinto the supervisory review
process
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12. OPINION ON DEFINED CONTRIBUTION RISK MANAGEMENT
 Two aspects of risk assessment that are relevant forDC IORPs:
1. quantitative elements in operational risk management,supplementingthe guidance in EIOPA’s existing
opiniononoperational riskmanagement
2. projections of future retirementincomeinlong-termrisk assessment fromthe perspective of members
and beneficiaries,also ininteractionwiththe
 determinationof the risk tolerance of members andbeneficiaries,and
 design and review of investment strategies
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13. PENSION TRACKING SYSTEMS AND DASHBOARDS
 Old-age dependencyratio(65+/20-64) in the EU is projectedto rise from
34.4% in 2019 to 59.2% in 2070
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14. OBSERVATIONS ON GREEK OCCUPATIONAL PENSIONS
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15. DEMOGRAPHIC OLD-AGE TO WORKING AGE RATIO, 1950-2080
1950 1960 1990 2020 2050 2080
Greece 12.4 12.2 22.9 37.8 75.0 79.7
EU27 14.6 16.0 21.6 33.6 56.7 62.0
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Source: UnitedNations,Department of EconomicandSocial Affairs (2019),Online Edition(forfuture periods:
medium-variant forecast)
StatLink https://stat.link/7bkwjc

16. ASSETS IN RETIREMENT SAVINGS PLANS (% OF GDP)
Retirementsavingsplans
as a percentageof GDP
Austria 6.6
Belgium 40.4
Czech Republic 9.5
Denmark 229.4
Greece 1.0
OECD 99.9
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Source: OECD Global PensionStatistics,websites andannual reports of reserve funds orother national
authorities
StatLink https://stat.link/qi2ev9

17. THANK YOU!
For moreinformation visit:
https://www.eiopa.europa.eu