IOPS Working Papers on Effective Pension Supervision
| As the proportion of retirement income provided by private pensions becomes increasingly important, the quality and effectiveness of their supervision becomes more and more crucial. The IOPS Working Paper Series, launched in August 2007, highlights a range of challenges to be met in the development of national pension supervisory systems.The papers review the nature and effectiveness of new and established pensions supervisory systems, providing examples, experiences and lessons learnt for the benefit of IOPS members and the broader pensions community. |
Call for papersThis working paper series aims to fill a gap in pension research by focusing specifically on supervisory issues. These are of increasing importance to all IOPS member countries and the broader pensions community due to the rise of private pensions and the move to a risk-based supervisory environment. The IOPS welcomes submissions for the working paper series. Authors who have papers covering relevant issues and who are interested in submitting them for inclusion in the series should contact us. |
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No 42 - 04/2024 Supervision of Pension Funds' Selected Investment Activities This report presents the findings from the recent (August 2023) survey on investment which aimed to understand the disparity between evolving investment activities and regulatory framework. The survey focused on selected four investment activities by pension funds and corresponding regulatory practices: a) leverage, b) lending, c) trading (including short selling) and d) indirect investments. A total of 32 IOPS Members (representing approximately 40% of the IOPS Governing Members) provided valuable insights and experiences. |
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No 41 - 09/2023 Liquidity risks for pension funds related to margin calls: Survey results This report presents the findings from the 2023 survey on pension funds' practices related to margin and collateral call activities in 37 IOPS Member jurisdictions. It provides information about: 1) margin call activities made by pension funds, 2) the utilisation of derivatives for liability-driven investment (LDI) strategies, 3) supervisory measures aimed at mitigating liquidity risks arising from margin calls, and 4) the availability if liquidity sources to address emergency margin calls. Margin call-related activities are present in approximately 38% of the surveyed jurisdictions, mainly for hedging, effective portfolio management, or implementing LDI strategies (30% of the surveyed participants). In many LDI funds, either no derivatives or minimal usage of derivatives are employed. Most notably, all respondents reported no significant liquidity risks related to margin calls to date, and they assessed the current liquidity risks as very low. |
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No 40 - 07/2023 How can digitalisation make the supervision of pension plans easier and more efficient? The report reviews some of the practical experiences of IOPS Members in developing and adopting specific SupTech tools. The report aims to identify most recent developments and areas of interest specific to the private pension sector supervision. Its findings are mainly based on the responses from 38 IOPS Members who provided their feedback to the survey. The report offers insights and key findings from the development and implementation stages of the adoption of innovative SupTech technology to daily supervisory work. This could serve as the learning experience among pension supervisory authorities. |
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No 39 - 12/2022 Report on Data Collection by Pension Supervisors This report looks at data collection practices employed by pension supervisors based on a survey of 41 IOPS member jurisdictions, with key updates observed since the previous IOPS Working Paper No 14, “Efficient Information Collection”. Key themes investigated in this report include prerequisites, information sources, data needs, data collection/analysis and IT systems to support information collection. This report also reviews recent issues related to data gathering arising from the transition to risk-based supervision and ESG oversight. Focusing on these topics, this report aims to provide learnings, better practices and insights that may serve as a good reference for pension supervisors seeking to enhance their data collection processes. Among its many findings, it highlights that the seamless data collection, particularly for RBS and ESG oversight, builds on the synergy of data availability/accessibility, diversified information sources, quality data requests as well as ample supporting tools such as IT systems. The report also finds that IT facilities and data technologies will grow in importance in data collection, with the increasing demands for the use of big data and advanced data validation/analytics skills in pension supervision. |
| No 38 - 06/2022
This public version of the RBS Learnings project report brings together experiences of pension supervisors and identifies learnings and good practices to support Members when designing, implementing, using or reviewing a risk based supervisory approach. Its content is drawn from a survey of 45 member jurisdictions and was supported by Member case studies, workshop discussions and a literature review. The report identifies trends and learnings in risk based supervision that have evolved since the IOPS RBS toolkit was first created in 2010. It finds that risk models continue to evolve to account for revisions in risk focus and different approaches to assessing and responding to risks and issues. Supervisory activities to support risk based supervision have expanded though data and the application of supervisory judgement remain critically important. The report describes common challenges that arise during the design and implementation phases of risk based supervision and offers insights on how pension supervisors have overcome these challenges. It observes that the assessment by authorities of their RBS approaches is a developing area and one where Members can particularly benefit from additional guidance. The report makes a number of recommendations regarding how IOPS guidance, including the RBS Toolkit, could be enhanced to account for the identified learnings and observed better practices. Finally, the report highlights that RBS approaches will continue to evolve and so it will be important that IOPS Members have opportunities to share experiences and better practices. Accordingly, there remains a critical role for the IOPS Secretariat to support Members by arranging regular training on key RBS topics and collating and sharing case studies, comparisons and other educational material from across the IOPS membership and other international organisations. |
| No 37 - 10/2021
Supervisory approaches to enhancing cyber resilience in the private pension sector: High-level summary of Members responses to the questionnaire |
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No 36 - 04/2021 |
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No 35 - 01/2021 The report looks into the types of DB pension funds in IOPS jurisdictions. The report provides |
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No 34 - 12/2019 |
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No 33 - 02/2019 |
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No 32 - 01/2019 |
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No 31 - 01/2019 |
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No 30 - 01/2018 |
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No 29 - 09/2017 |
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No 28 - 07/2017 |
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No 27 - 12/2016 |
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No 26 - 12/2016 |
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No 25 - 12/2015 |
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No 24 - 09/2015 |
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No 23 - 09/2015 |
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No 22 - 01/2015 |
| No 21 - 01/2015 Supervising Distribution of Annuities and other forms of Pension Pay-out This paper provides an overview of the main types of pension products on offer in different IOPS Member jurisdictions and way they are distributed. It presents how IOPS Members supervise the entities providing and advising on these products and identifies the main challenges pension supervisors face with respect to supervising these products and proposes some possible responses to these challenges. The paper provides detailed case studies of the automated system of pension bids (SCOMP, Sistema de Consultas y Ofertas de Montos de Pensión) operating in Chile and the Open Market Option (OMO) system used in the UK. ____________________ |
| No 20 - 04/2014 Update on IOPS Work on Fees and Charges This paper identifies the challenge in making comparisons of fees across different pension systems and updates the analyses of charge ratios for the countries that originally participated in the 2008 exercise (IOPS WP No. 6), while looking at the historic trends of both fees charged by pension funds to members and the operating expenses of pension funds. Previous work tried to explain fees variation across different jurisdictions by taking into consideration factors such as GDP, ratio of total pension assets to GDP, the mandatory or voluntary nature of the retirement system, etc. However, the results of such research have not been conclusive, in part because of the data challenges of cross-country comparisons. This paper aims to explain the evolution of fees within countries, comparing the level in 2012-13 to that of six years ago by taking into consideration the reforms that jurisdictions have enacted since 2008, the year of the previous research. ____________________ |
| No 19 - 03/2014 Stress Testing and Scenario Analysis of Pension Plans Stress testing is a useful and increasingly popular method of analysing the resilience of financial systems to adverse events. It has only recently been introduced to the pensions sector in some countries as well. This paper presents the results from a survey of stress testing practices among IOPS member countries and provides some reflections on whether and how stress testing could be applied in DC plans. In addition to the technical aspects of stress testing, the paper dwells on the governance requirements for stress testing, drawing some conclusions and lessons for pension supervisors as they introduce and develop their own techniques. ____________________ |
| No 18 - 12/2012 Supervising Default Investment Funds This paper aims to address how to ensure that default funds are well designed, in the sense of suitable for the members who are placed in them, and how to identify the factors that need to be considered in designing a default investment option. The paper does not intend to investigate the design of a model default portfolio with quantitative settings. ____________________ |
| No 17 - 12/2012 Supervision of Pension Intermediaries The goal of the paper is first to establish how private pensions are distributed in different IOPS member countries, and how pension intermediaries involved in the advice and sales process are regulated and supervised. The paper identifies common approaches and challenges encountered by IOPS members in their jurisdictions, and looks at different regulatory mechanisms and supervisory tools which have been used to overcome these issues. ____________________ |
| No 16 - 07/2012 Structure of Pension Supervisory Authorities and their Approaches to Risk-Based Supervision This paper examines whether the Global Financial Crisis (GFC) has had an impact on pension supervision and it looks at the effect of the GFC on risk-based supervision (RBS), before going on to examine the potential impact on the external and internal structure of pension supervisory authorities. ____________________ |
| No 15 - 12/2011 Comparative Information Provided by Pension Supervisory Authorities The provision of information on pensions is of increasing importance as pensions savings are growing and becoming an important part of the financial system, and as defined contribution pension plans, which usually involve competitive pension products and providers, are becoming more dominant. This paper examines the role pension supervisory authorities can play in providing information. How comparative information on costs, investment performance and comparative service data is presented by IOPS member authorities is outlined and some lessons learnt suggested. ____________________ |
| No 14 - 03/2011 Efficient Information Collection The purpose of this paper is to provide guidance on the factors pensions supervisors should consider when deciding what information they need to obtain, and how such information can be collected and handled efficiently. Particular focus is given to information required for a risk-based approach to supervision. Suggestions and examples are provided on how supervisors may identify information needs and on the practicalities of obtaining (and sharing) information from different sources. ____________________ |
| No 13 - 09/2011 Pension Fund Use of Alternative Investments and Derivatives: Regulation, Industry Practice and Implementation Issues This paper reviews the regulation in place which aims to manage the potential risk exposures that alternative investments and derivatives present, canvasses the implementation issues, highlights the potential risks and reviews current risk management practices observed by pension funds in managing these risk exposures. The paper finally concludes with observations which can be translated into lessons for consideration by supervisory authorities when developing future pension fund regulation and supervision practices of alternative investments and the use of derivatives, whilst also taking into account the IOPS Good Practices. ____________________ |
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No 12 - 10/2011 Related materials: Introduction to IOPS Working Paper and Supervising DC Funds in Australia (pdf), Ross Jones, APRA, Australia |
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No 11 - 11/2009 Related materials: 'Rethinking Risk Management in Financial Services', World Economic Forum report, April 2010 |
| No 10 - 11/2009 Governance and Performance Measurement of Pension Supervisory Authorities The governance, oversight and performance measurement of financial supervisory authorities are increasingly recognized as important topics – not least due to the recent financial crisis and perceived problems in (and lack of) the regulatory oversight of financial institutions. Yet this is a relatively under-researched area, particularly in relation to pension supervision. This paper therefore attempts to combine theoretical material from a range of financial sectors along with practical examples from the pensions sector to establish what the good governance of pension supervisory authorities entails, how it is applied in practice, and how it can be monitored and measured. ____________________ |
| No 9 - 04/2009 Private Pensions and Policy Responses to the Financial and Economic Crisis This paper discusses responses to current financial and economic crisis by regulators, supervisors and policy makers in the area of private pensions. These responses are examined in the light of international guidelines, best practices and recommendations to improve the design of private pensions. ____________________ |
| No 8 - 08/2008 Supervisory Oversight of Pension Fund Governance This working paper mainly analyses the responses of IOPS members to a survey on supervisory oversight of pension fund governance. The survey and responses cover the current focus, issues and problems as well as future developments. A few case studies are also included in the paper to illustrate the different types of issues that pension fund systems may face and the means that may be adopted by the relevant supervisory authorities to resolve these issues. ____________________ |
| N° 7 - 05/2008 Transparency and competition in the choice of pension products: The Chilean and UK experience This paper discusses two countries building centralised information and quotation systems for annuity products to help individuals select the right retirement product at the right price. The SCOMP system in Chile is examined and developments around the Open Market Option (OMO) in the UK are discussed, with lessons drawn for other pension supervisory authorities contemplating introducing such centralised systems. ____________________ |
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N° 6 - 06/2008 Please note that this paper has been superseded by IOPS Working Paper 20, ‘Update of IOPS Work on Fees and Charges’, issued in April 2014. |
| N° 5 - 09/2008 Information for Members of DC Pension Plans: Conceptual Framework and International Trends In recent years, the shift towards defined contribution (DC) pension plans has been a key trend in the field of private pension provision. In this context, where a wide range of options may potentially be available to individual plan members, it is crucial to ensure that they have the information necessary to make appropriate choices. Based on the findings of an IOPS survey, this paper offers a conceptual framework for considering information provision within the context of the pension system and related factors (such as the range of choices offered to individuals, the use of default options, the level of financial literacy, etc). ____________________ |
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N° 4 - 08/2007 |
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N° 3 - 08/2007 |
| N° 2 - 08/2007 Supervisory Education, Outreach and Communication, including Training of Trustees Some pension supervisors have responded to the growing complexity and importance of private pension provision by delivering educations programs for pension fund managers, fiduciaries and members. This paper draws together information on how and why these programs are carried out, analysising their impact and effectiveness in examples from Kenya, Ireland, South Africa and the UK. ____________________ |
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N° 1 - 08/2007 A Review of the Pros and Cons of Integrating Pension Supervision with that of Other Financial Activities and Services |
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