EIOPA assesses the progress of supervision in IORP’s Prudent Person Rule compliance

The European Insurance and Pensions Authority (EIOPA) published today a follow-up report to the 2019 peer review on the application of the Prudent Person Rule for IORPs according to the IORP II requirements. IORPs are required to invest their capital in the best interest of members and beneficiaries and respect specific investment rules. The report assessed how national competent authorities (NCAs) implemented the recommended actions identified in 2019.

The 2019 peer review issued 27 recommendations across seven areas to 28 NCAs. Of these, 8 recommendations were fully fulfilled, 10 were partially fulfilled but 9 were not fulfilled. Recommendations regarding the application of look-through methodology when IORPs are investing in collective investment vehicles have been predominantly addressed. However, recommended actions regarding the assessment of the governance of the investment process and the use of the on-site inspections have not been fulfilled. In other areas compliance is mixed.

Implementation of recommended actions often depended on the implementation status of the IORP II Directive. For those NCAs still transitioning to a risk-based approach, some of the secondary legislation and development of supervisory practices still needs to be implemented and this has an impact on the status of the fulfilment of recommended actions or implementation of best practices. Among the reasons for non-fulfilment of the recommendations were lack of resources and other priorities.

EIOPA invites NCAs that have not yet fulfilled the recommended actions to consider the identified best practices as inspiration for the development of their national supervisory practices. EIOPA will continue to closely monitor the implementation of the recommended actions.

Read the report

About peer reviews and follow-up reports

The role of peer reviews is to assess the application of existing practices by the national supervisory authorities, such as the implementation of directives, regulations, technical standards, EIOPA guidelines and recommendations, or supervisory practices. Peer reviews should also stimulate dialogue within and between supervisory authorities and facilitate sharing of best practices.

EIOPA undertakes pursuant Article 30(6) of the EIOPA Regulation a follow-up report two years after the publication of the peer review report. The follow-up report includes an assessment of the adequacy and effectiveness of the actions undertaken by the competent authorities that are subject to the peer review in response to the follow-up measures of the peer review report. EIOPA’s objective is to achieve consistent supervisory practices with the goal to protect policyholders.

EIOPA conducts peer reviews in accordance with Article 30 of EIOPA regulation. See the current two-year peer review work plan.