PensionsEurope do not want EMIR rules to jeopardise long-term investments

PensionsEurope do not want EMIR rules to jeopardise long-term investments

PensionsEurope calls on the Commission to ensure that EMIR rules do not jeopardise long-term investment in the EU

Brussels, 21 May 2015 – The European Commission launched today a consultation on the Regulation on
OTC derivatives, central counterparties and trade repositories (EMIR). PensionsEurope stands ready to
work with EU decision-makers and other stakeholders to ensure that the EMIR regulation boosts growth
and promotes long-term investment.

Pension funds are first and foremost institutions with a social purpose: they serve the sole purpose of
providing retirement income to future European pensioners. They are responsible for occupational
retirement provision and they contribute to the adequacy of pension treatments.
Pension funds are major investors in the European economy. The level of assets invested in the EU
differs between Member States (e.g. for reasons of risk allocation and diversification and differences
between pension systems) and ranges from 50% to over 75%. They mostly invest in high-maturity assets
in order to match their long-term liabilities. European pension plans are managed on the base of the
prudent person principle and they use OTC derivatives primarily to manage currency and interest raterisks
associated with their long-term liabilities.

Central clearing is an important piece of the G20 reform agenda, but it is funded by investors’ capital
that cannot be directly invested in growth. The members of PensionsEurope believe that a “one-sizefits-all”
approach in EU financial policy does not work for pension funds, because they have in place
specific business models and governance structures which significantly differ from those of other
financial institutions. Pension funds are currently temporarily exempted from the clearing obligation of
OTC derivatives.

Matti Leppälä, PensionsEurope’s Secretary-General and CEO, said: “We welcome the public consultation
launched today and urge the Commission to work closely with pension funds in order to improve the
regulation and to bear in mind that EMIR rules should not impose further costs on pension scheme
arrangements as these would have a negative impact on the retirement income of future European
pension beneficiaries. Particular attention should be paid to the treatment of long directional OTC
derivatives position of pension funds under EMIR. EMIR, with its high costs and fees, is currently not
based on a system of risk of default. Without a fundamental review, pensioners (European tax payers)
are expected to pay for a system that facilitates highly profitable private institutions to benefit
substantially from mandatory clearing. But this system puts pensioners’ money at risk and pension funds
may even become less safe as a result of EMIR”.

Joanne Segars, PensionsEurope’s Chair, added: “PensionsEurope calls on the Commission to develop
solutions which would not penalise pension funds as they contribute to financial stability instead of
posing systemic risks. This has been acknowledged by the Financial Stability Board and the International
Organization of Securities Commissions recently in a paper on Assessment Methodologies for Identifying
Non-Bank Non-Insurer Global Systemically Important Financial Institutions.”

Categories: European Pensions, News
Tags: Europe, reforms

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