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European Insurance and Occupational Pensions Authority

1139

Q&A

Question ID: 1139

Regulation Reference: Guidelines on system of governance

Article: 275

Status: Final

Date of submission: 04 May 2017

Question

Please provide further information regarding guideline 9 (remuneration) no. 2.33: Does sentence 1 mean, that e.g. collective bargaining arrangements are exempted, so that the member states are still able to regulate remuneration regarding termination payments? or does it mean that even general national law, including collective bargaining agreements have to be in line with the requirement mentioned in the following?

EIOPA answer

As a principle, collective bargaining arrangements (CBAs) are not "exempted from remuneration requirements".

General principles of EU law apply and collective bargaining must not lead to a circumvention of the remuneration requirements. Hence, the sections of the CBAs which cover remuneration requirements also need to reflect the EU regulation and in particular the underlying principle that remuneration should provide an incentive for proper risk management by the sector (see Article 275 of the Solvency II Delegated Regulation, EU 2015/35 of 10 October 2015).

The explanatory text recognises that CBAs can impose limitations on the remuneration policy, but these will still need to be within the applicable EU regulation.

In practice, par. 2.33 of the Explanatory Text describes the situation that when leaving the undertaking, the remuneration policy should foresee that the termination payment reflects the performance of the person over the whole time of his/her engagement at the undertaking, respecting Article 275(2)(f) regardless of CBAs, statutorily determined amounts of redundancy pay-outs or other national legislation as for example termination payments.

Please note that the aim of an explanatory text is to explain the Guidelines by giving further details, adding cross-references, concrete applications or examples without creating new obligations that should be complied with.