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IOPS Principles of private pension supervision

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Title: IOPS Principles of private pension supervision


1
IOPS Principles of private pension supervision
  • John Ashcroft
  • President, IOPS
  • Head of Strategy, UK Pensions Regulator
  • Supervision of Pension Systems
  • Current Trends and Issues
  • Warsaw 17-19 September 2006

2
IOPS principles of private pension supervision
  • What is IOPS
  • What IOPS is doing
  • The diversity of pension supervision
  • The common core principles

3
What is IOPS
  • The International Organisation of Pension
    Supervisors (IOPS)
  • An independent international body formed in 2004,
    representing those involved in the supervision of
    private pension arrangements.
  • Currently has around 50 members and observers,
    representing over 40 countries worldwide - from
    Australia to Zambia
  • Covering all levels of economic development and
    bringing together all types of pension and
    supervisory systems.

4
IOPS Goals
  • Serving as the standard-setting body on pension
    supervisory matters
  • Promoting international co-operation on pension
    supervision
  • Providing a worldwide forum for policy dialogue
    and exchange of information on pension
    supervision
  • Participating in the work of relevant
    international bodies in the area of pensions,
    including joint research and activities to
    improve statistical collection and analysis

5
Programme of Work Key Projects
  • Risk-based supervision
  • Joint with World Bank first project designed to
    provide a comprehensive source of information on
    the motivations, practices and outcomes of
    risk-based methods used by private pension
    supervisors.
  • World Bank case studies on Australia,
    Netherlands, Denmark, Chile, Mexico
  • IOPS case studies on South Africa, Croatia,
    Kenya, UK, Germany
  • IOPS Principles Private Pension Supervision
  • Approved by Governing Membership in December 2005
  • Open for consultation until May 2006

6
Programme of WorkOn-going Projects
  • Supervisory education, including training of
    trustees- Kenya, Ireland, South Africa, United
    Kingdom, World Bank
  • Guidelines for compliance with the licensing of
    pension funds- Australia, Germany - joint work
    with the OECD
  • Cross-border pension supervision- Spain,
    Hungary, UK, Luxembourg
  • Utilisation of IT technology in off-site
    supervision- Turkey
  • Analysis of supervisory structures
  • - Mexico
  • Information for members of DC schemes
  • - Italy, Germany, Hungary

7
Cooperation with other organisations
  • Partnership agreements
  • OECD
  • ISSA
  • IAIS (pending)
  • Associate Members and Observers
  • IAA
  • IMF
  • World Bank
  • Cooperation with regional supervisory bodies
  • AIOS
  • CEIOPS

8
Conference Schedule
  • First Annual General Meeting held December 2005
  • Bylaws amended
  • Principles approved for consultation
  • New Executive Committee elected
  • Australia / Chile / China / Germany Hungary /
    Italy / Jordan / Kenya / Pakistan / UK /
    Netherlands
  • 2005 Regional conference held in Bangkok,
    Thailand
  • 12 Asian countries represented
  • 100 global delegates in total
  • 2006 Regional conference held in Santiago, Chile
  • 11 Latin American countries represented
  • 150 global delegates in total (33 countries)

9
2006/ 2007 Information
  • Meeting Schedule
  • November 6-8th 2006 Istanbul, Turkey
  • IOPS committee meetings AGM, OECD/ IOPS
    Pensions Global Forum
  • March 21-23rd 2007 Amsterdam, the Netherlands
  • IOPS committee meetings DNB Pensions
    Conference
  • June 1st 2007 Basel, Switzerland
  • IOPS committee meetings
  • November 2007, Beijing, China
  • IOPS committee meetings AGM, OECD/ IOPS
    Pensions Global Forum
  • Annual fees
  • 7,500 5,000 2,500
  • www.iopsweb.org

10
Diversity of supervised markets
  • DB or DC or both
  • Mature or developing market
  • Employer or Government policy driven
  • Trust-based or financial entities
  • Relationship with insurance products
  • Large or small numbers of schemes and plans

11
Pension supervision structures are diverse
  • Relationship with pensions regulation
  • Distance from Government
  • Unitary or combined supervisors

12
Diversity Pension Supervisory Structures
13
There are diverse supervision models
  • Market regulation
  • Conduct of business
  • Prudential
  • Different supervision paradigms
  • Transactional focus on influencing activities
  • Structural focus on supervising the entities
  • Risk-based approaches
  • Quantitative sophistication
  • Prioritisation of interventions
  • Increased emphasis on education

14
But there are many common challenges
  • Integration of financial markets and supervision
    structures
  • Globalisation
  • Increasing longevity
  • The low interest rate environment
  • Adapting to new financial products and
    transactions Accommodating diversity and
    individual choice
  • Transition from investment in public debt
  • Enhancing corporate governance
  • Expanding coverage of informal sector and
    portability
  • Developing and supervising the pay out phase
  • Concerns about regulatory burdens
  • Moving to a risk-based approach

15
IOPS Principles of Private Pension Supervision
  • Principle 1 Objective
  • National Laws should assign clear and explicit
    objectives to pension supervisory authorities
  • Principle 2 Independence
  • Pension supervisory authorities should have
    operational independence
  • Principle 3 Adequate Resources
  • Pension supervisory authorities require adequate
    financial, human and other resources
  • Principle 4 Adequate Powers
  • Pension Supervisory authorities should be endowed
    with the necessary investigatory and enforcement
    power to fulfil functions and achieve their
    objectives
  • Principle 5 Risk Orientation
  • Pension supervision should seek to mitigate the
    greatest potential risks to the pension system

16
IOPS Principles of Private Pension Supervision
  • Principle 6 Proportionality Consistency
  • Pension supervisory authorities should ensure
    that investigatory and enforcement requirements
    are proportional to the risks being mitigated and
    that their actions are consistent
  • Principle 7Consultation Cooperation
  • Pension supervisory authorities should consult
    with the bodies they are overseeing and cooperate
    with other supervisory authorities
  • Principle 8 Confidentiality
  • Pension supervisory authorities should treat
    confidential information appropriately
  • Principle 9 Transparency
  • Pension supervisory authorities should conduct
    their operations in a transparent manner
  • Principle 10 Governance
  • The supervisory authority should adhere to its
    own governance code and should be accountable
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