From Q3 2019, all IORPs in the EEA will need to report to their National Competent Authorities in XBRL format. We’ve got the latest from EIOPA to help you start preparing for the new standards.
What is the IORP II Directive?
As part of a drive to increase financial stability across the EEA, the IORP II directive will increase accuracy and harmonisation of reporting for pension funds.
What will the Reporting Standards look like?
The reporting tables will be a lot less extensive than for insurance companies. The “List of assets” and “Collective investment undertakings – look-through approach” are still likely to be the most complex in terms of data volume.
The rest of the tables are quite small, a common denominator being the split between defined benefit (DB) and defined contribution (DC) schemes. One of these small but quality-driven tables is a key IORP requirement, showing the changes in technical provision and the discount rates used in the provision calculations. This is where EIOPA will show an interest due to potential differences in valuation methods and assumptions used across different member states.
Some of the implementation aspects are not definitive, but we do know there will be two distinct reporting scenarios. The report will either be a pure EIOPA disclosure or an EIOPA disclosure with ECB add-ons, avoiding separate filings when IORPs must report under both mandates. For now, having a pure ECB reporting as a third scenario has been ruled out.
Who is in scope?
All IORPs in the EEA are in scope for the new reporting standards.
NCA’s do have some discretion for exclusions. They can exempt the smallest IORPs from quarterly reporting and/or from reporting the ‘List of assets’ if at least 80% (75% until 2022) of the sector is covered by the full set of annual reporting.
NCAs may only exempt the smallest IORPs in the corresponding Member States if the total assets are less than €25m, or the number of its members including beneficiaries is under 100. NCAs will need to report a specific set of data of such Exempted IORPs for the annual reporting1.
What are the reporting standards?
Just like Solvency II, IORPs will need to report in XBRL format. They’ll submit individual reports to their NCA’s, who will in turn send either individual (for larger IORPs) or aggregated reports to EIOPA.
Currently, the existing taxonomy includes no validation rules, but we’re expecting clarity with another draft at the end of August. We expect these will not be as numerous as for the insurance requirements but will reflect the same format and complexity.
We’re also expecting an update soon on whether or not NCA’s will have specific variations. It’ll be up to them to publish their approach in good time and let IORP’s know if there’ll be any local variances.
When is the first filing deadline?
IORPs will need to submit quarterly, with an extra report annually. The first quarterly report deadline is Q3 2019, ten weeks + ten working days after the end of the quarter. Annual reporting will kick in for firms’ year-end 2019.
What the changes mean
As discussed at the XBRL conference, there’s a lot of new regulation on the horizon. EIOPA has acknowledged this and aligned the IORP reporting with the Solvency II reporting requirements, in order to make the transition to pensions reporting simpler. After its final release, EIOPA believe the IORP taxonomy could remain static without any major amendments for the next year or more.