EIOPA publishes its Discussion Paper on the Methodological Framework for Stress-Testing IORPs

The European Insurance and Occupational Pensions Authority (EIOPA) published today its Discussion Paper on the Methodological Framework for Stress-Testing Institution for Occupational Retirement Provision (IORPs) for consultation with stakeholders. The public consultation of the methodological framework shall foster an active dialogue amongst supervisors, the sector, consumer associations and academics.

The methodological framework for stress-testing IORPs sets out theoretical and practical rules, guidance and possible approaches to support future IORP stress test exercises. This conceptual approach is expected to make IORP stress test exercises more efficient, in particular for the IORPs to carry out the stress test and the national competent authorities and EIOPA to validate and analyse the results.

The paper introduces a toolbox approach, consisting of relevant analytical tools and approaches that can appropriately capture the characteristics of both Defined Benefit and Defined Contribution IORPs. The deployment of the different tools can be tailored to the specific objective of the stress test.

EIOPA invites stakeholders to provide their feedback on the discussion paper by responding to CP-21-003@eiopa.europa.eu by 22 September 2021.

Up to now, EIOPA has initiated three Union-wide pension funds stress tests, most recently in 2019: occupational pension’s stress test 2019. Herein, EIOPA provided for an initial assessment of IORPs’ exposure to climate related risks. The methodological framework uses the knowledge and experience built in these exercises and extends the approaches to sustainability and emerging risks.