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Aon Hewitt says the new IORP II Directive deserves a mixed reaction
New governance rules are well meaning but heavy-handed and could generate significant cost
NYSE:AON

LONDON, 28 March 2014 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said that the new IORP II Directive can at best only be greeted with mixed views by Europe's pensions industry.

Kevin Wesbroom, senior partner, Aon Hewitt UK said:
"The Commission has kept its promise from last summer and not imposed their Draconian solvency rules on European pension schemes – and that is very welcome. However, it has also given EIOPA (the European Insurance and Occupational Pensions Authority) the authority to define whatever risk reporting rules they want.  That could introduce via the back door – and without the opportunity for member state approval or veto - a requirement to report funding and risk against the Commission's misguided Holistic Balance Sheet structure.

"Many of the new governance rules look like common sense. Large pension funds in mature markets such as UK, Netherlands, and Germany will be doing much of this already and have strong governance frameworks, internal controls and risk management systems.  But although the Commission has paid lip service to proportionality, they have not applied it where it matters in the detailed requirements.  This could impose enormous extra costs, particularly for smaller pension schemes.  Aon Hewitt believes the costs could far exceed the Commission's estimates.  The fundamental problem is that the Commission is still trying to treat pension funds as insurance companies, with the new Directive copying too much of the governance rules incorporated into Solvency II without tailoring them for the smaller pension schemes in existence across Europe."

Georg Thurnes, partner, Aon Hewitt, Germany, said:
"Governance, especially risk management, and transparency are really important for responsible pension management, particularly in our volatile world. For German IORPs this has been acknowledged already by law and by-laws of the supervisor, in setting out corresponding rules.

"What is most important is that these rules acknowledge the principle of proportionality. Since the commission is apparently sticking with its view that IORPs are financial institutions - which is definitely wrong for German single employer IORPs - I am concerned that the new framework will not allow for an appropriate attention to the needs of these most effectively operating institutions. The additional burdens of doubtfully useful regulations on reporting and information requirements would at the end of the day reduce the benefit level for the members."

 

Media Contact: 
Colin Mayes                                               Marina Jane Sanchez
Aon Hewitt                                                  Capital MSL
01372 733689                                             020 3219 8811
colin.mayes@aonhewitt.com                        marina.jane-sanchez@capitalmsl.com
 

Notes to editors

About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  For more information on Aon Hewitt, please visit www.aonhewitt.com.

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About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurancebrokerage, and human resources solutions and outsourcingservices. Through its more than 66,000 colleagues worldwide, Aonunites to empower results for clients in over 120 countries via innovativeand effective riskand peoplesolutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.comfor more information on Aon and www.aon.com/manchesterunitedto learn about Aon’s global partnership and shirt sponsorship with Manchester United.
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