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 papers

This 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.


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.

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.

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.

N39 - 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.

N38 - 06/2022

Report on learnings from the design, implementation, use and review of Risk Based Supervision by pension supervisory authorities

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.

N37 - 10/2021

Supervisory approaches to enhancing cyber resilience in the private pension sector: High-level summary of Members responses to the questionnaire
The reports looks at the main cyber threats and trends observed in regard to cyber incidents in the private pension field in recent years and during the COVID-19 period. It highlights supervisory practices that contribute to effective cyber security risk supervision in the private pension sector.

N36 - 04/2021
Supervision of infrastructure investments by pension funds
The report reviews the supervisory practices of 33 IOPS jurisdictions in relation to complex infrastructure investments. It aims to understand what role supervisors are playing to address risks that investors are taking and what supervisory approaches have been developed to overcome these issues.

No 35 - 01/2021
Supervision of solvency of occupational DB pension funds

The report looks into the types of DB pension funds in IOPS jurisdictions. The report provides
a detailed analysis of 12 jurisdictions that provided comprehensive data on DB occupational pension schemes – it reviews valuation of their assets and liabilities, and examines how schemes’ solvency is defined and monitored.

No 34 - 12/2019
Design and Supervision of Pension Projections in 26 Jurisdictions
Pension supervisors are challenged with regard to assuring quality of projections, finding proper methods for presentation of results, standardisation issues as well as ensuring compliance. This report looks at the design and supervision of pension projections based on a survey of 26 jurisdictions and provides an overview of key variables used while making pension projections.
It also proposes recommendations in the area of design and supervision of pension projections.

No 33 - 02/2019
Impact of the digitalisation of financial services on supervisory practices in the private pension sector
Case studies from: Hong-Kong, China / Kenya / Mexico
This paper reviews the most significant applications of new technologies for the private pension sector and concentrates on the assessment of the current and foreseen impact of digitalisation on pension supervision. Still being at an early stage of adoption in most jurisdictions, technology-enabled solutions (SupTech) are considered important tools that could enhance the quality and cost-effectiveness of supervisory oversight. The project includes also three country case studies from Hong Kong, China; Kenya and Mexico.

No 32 - 01/2019
2018 Update on IOPS work on fees and charges
The paper reviews fees charged in 88 different pension schemes in 45 selected jurisdictions. It presents the current market average values as well as the legal ceilings. In 14 jurisdictions for which we had sufficient data for both 2014 and 2018, the major tendency is the decrease of average fees as compared to 2014. With regard to legal maximum fees, eight countries lowered them and one increased. Six jurisdictions did not change their legal maxima.

No 31 - 01/2019
Are pension funds a stabilising factor in financial markets? Evidence from four countries
The paper analyses qualitatively and quantitatively the investment behaviour of pension fund sector during and after the 2008-09 financial crisis until 2014-2016 in Chile, Mexico, Poland, and Italy. Four methods were used: an analysis of average quarterly transactions, a scatter plot analysis of the relation between average quarterly net purchases and quarterly changes in asset value, a correlation analysis of average quarterly transactions in equity market and its index values, and a regression analysis of average quarterly transactions in equity market and its index values.

No 30 -  01/2018
Macro- and Micro-Dimensions of Supervision of Large Pension Funds
This paper focuses on the supervision of large private pension funds (LPFs) and their potential impact on financial markets and the economy. The report is based on a survey of 34 members of the International Organisation of Pension Supervisors (IOPS). In many jurisdictions the large pension funds are on a par with big banks and insurance companies in terms of pension customers and savings under management - the report provides a landscape on globally and domestically large pension funds in IOPS surveyed jurisdictions. There are two dimensions to the supervision of LPFs. The macro-dimension focuses on guarding against the potential adverse impact of such funds on financial markets and the overall economy, whereas the micro-dimension is about the possibility that inappropriate governance and operations of the LPFs may bring harm to the well-being of many pension beneficiaries and pension sponsors, norms of pensionn funds' market conduct, and even to the orderly operation of supervisory bodies.

No 29 - 09/2017
Supervision of Pension Investment Management Including Non-traditional Investment
This paper investigates the approach and the methodology used for supervising private pension funds’ investment management practices and activities, with a focus on non-traditional investment (such as hedge funds, currency, commodities, structured products, private equity, real estate or infrastructure). Its findings are based on responses from 43 IOPS members who provided feedback to the survey, as well as the analysis of the IOPS and OECD principles and OECD data on pension funds’ investment limits and actual asset allocations in selected non-traditional investments.

No 28 - 07/2017
Pension Funds and the Impact of Switching Regulation on Long-term Investment

This paper looks at the impact of members’ ability to switch pension fund provider and /or portfolio on the allocation of pension funds to long-term investments. The level of annual turnover in pension fund portfolios was compared with the amount of short-term investments (using government treasury bills and bank deposits as proxy). The investment regulations around switching and other market conduct were then considered.
The paper finds that greater movements between pension fund providers and between portfolios is linked to increased holdings of short-term and more liquid assets. Switching appears to be driven by competition, market structure, and investment advice, and, unfortunately, frequently results in poor investment returns for members.
The paper makes six recommends for regulators.

No 27 - 12/2016
The Role of Supervision Related to Consumer Protection in Private Pension Systems
The report identifies a number of good practices in the IOPS jurisdictions and encourages supervisors to implement them. The report is therefore the source for the IOPS Good Practices on supervisory activities in the area of pension consumer protection that are currently under development by the International Organisation of Pension Supervisors.

No 26 - 12/2016
Supervision of Lost Accounts and Unclaimed Pension Benefits
This paper discusses supervisory practices for, and implications of, lost accounts and unclaimed pension benefits (including unaccounted pension assets). Supervision and proper regulation of the issue of lost accounts and unclaimed pension benefits are important because a loss of contact may result in a forfeiture of substantial retirement benefits for individual members. Proper management and minimising the amount of lost accounts and unclaimed pension benefits are fundamental if supervisors are to build trust in the pension system.

No 25 - 12/2015
The Concept of Target Retirement Income: Supervisory Challenges
This paper discusses supervisory challenges in relation to the concept of the target retirement income (TRI). The TRI framework attempts to shift the short-term focus of pension providers and investment managers towards the long-term income perspective of retirement savers. It seeks to address the needs of pension fund members by providing them with understandable and substantial information about their expected income needs in retirement and the risks to which they are exposed.

No 24 - 09/2015
Background Paper: The role of actuarial calculations and reviews in pension supervision

This Background Paper examines in details the role of actuarial calculations and reviews for pension supervision from the perspective of surveyed actuarial professionals (IAA) and pension supervisors (IOPS). It provides a comprehensive analysis of responses received from both institutions in the areas of: requirements placed on actuarial professionals, expectations of supervisors towards actuarial calculations and reviews, responsibilities and liabilities of actuarial professionals, fit and proper requirements by pension supervisors and the importance of actuarial calculations and reviews in pension schemes and their risk management. The synthesis of this paper is published as IOPS Working Paper No. 23.
The main finding of the paper is that actuarial calculations and reviews have a crucial role in the oversight function, especially when considering the supervision of defined benefit (DB) and hybrid pension funds. Their primary function in the pension supervision process of such funds is to ensure that the entities are complying with legal provisions on how the fund is operating, as well as in complying with requirements for funding.
The paper identifies several potential challenges that might be faced by supervisors with regard to the conduct or role of actuarial professionals. These relate to: quality of actuarial assumptions, use of technical language, inaccurate information, responsiveness by actuarial professionals, their independence, adequacy of resources, availability of timely information and observance of statutory requirements or legal changes.

No 23 - 09/2015
Synthesis Paper: The role of actuarial calculations and reviews in pension supervision
This synthesis paper is an abridged version of the background paper published as IOPS Working Paper No. 24. It briefly describes calculations and reviews, the role of the actuary as well as other different professionals undertaking these calculations. It then discusses the role that calculations and reviews can play in pension supervision, and concludes by outlining the challenges (and potential solutions) for supervisors using actuarial calculations.
The main finding of the paper is that actuarial calculations and reviews have a crucial role in the oversight function, especially when considering the supervision of DB and hybrid pension funds. Their primary function, in the pension supervision process of such funds, is to ensure that the entities are complying with the legal provisions on how the fund is operating as well as complying with the requirements for funding.
The paper identifies several potential challenges that might be faced by supervisors with regard to the conduct or role of actuarial professionals. These relate to: quality of actuarial assumptions, use of technical language, inaccurate information or responsiveness of professionals involved in actuarial calculations and reviews, their independence, adequacy of resources, availability of timely information and observance of statutory requirements or legal changes.

No 22 - 01/2015
Role of Pension Supervisory Authorities in Automatic Enrolment
This paper reviews the experiences of supervisory authorities in jurisdictions where automatic enrolment programmes were implemented at the national level: Italy, New Zealand and the United Kingdom, and in other jurisdictions where automatic enrolment applied to specific subsets of workers or plans: in Chile for self-employed workers for a limited period of time and the United States for certain occupational pension plans.
The paper identifies the principle areas of involvement of pension supervisory authorities and the main directions and challenges for the supervisory oversight of automatic enrolment programmes.
The paper finds that pension supervisory authorities play an important role in automatic enrolment. Pension supervisory authorities are involved in designing automatic enrolment, including their default arrangements. They also contribute to developing and strengthening the legal framework to better protect the interests of the growing number of participants, and are involved in the setting of administrative processes for automatic enrolment and related procedures. Their central role consists of overseeing and enforcing compliance with the automatic enrolment legal provisions. The pension supervisory authorities also participate in the development of communication campaigns to promote understanding about automatic enrolment and foster the compliance.

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.

No 12 - 10/2011
Managing and Supervising Risks in Defined Contribution Pension Systems

Defined contribution (DC) plans are playing a larger role in pension systems around the world. Pension supervisory authorities are consequently asking if their oversight approaches need to adapt to this development – given that the risks within DC systems are born by the plan members themselves?
This paper highlights the key challenges for DC supervisors, outlining the different mechanisms which can be used to control risks within DC systems, and how the use of these mechanisms informs the supervisory approach. Case studies of IOPS members overseeing DC systems are also provided.

Related materials: Introduction to IOPS Working Paper and Supervising DC Funds in Australia (pdf), Ross Jones, APRA, Australia

No 11 -  11/2009
Pension Funds' Risk-management Framework

Drawing on the experience of the pensions and other financial sectors, this paper examines what sort of risk-management framework pension funds should have in place. Such frameworks are broken down into four main categories: management oversight and culture; strategy and risk assessment; control systems; and information and reporting. Ways in which supervisory authorities can check that such systems are operating are also considered, with a check list provided to assist pension supervisory authorities with their oversight of this important area.

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.

N° 6 - 06/2008
Comparison of Costs and Fees in Countries with Private Defined Contribution Pension Systems

The fees and charges imposed upon pension funds are of great interest and importance to pension supervisory authorities as they have a significant impact on the amount of retirement income delivered to individuals, particular in the case of defined contribution (DC) pension schemes. Yet administrative fees are charged for services in different ways, with the diversity of charges and the specific details involved in each case making it impossible to directly compare administrative charges nationally and internationally. This paper therefore attempts to model such charges on a unified basis to allow for a standardized international comparison, known as the charge ratio.

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).

N° 4 - 08/2007
Experience and Challenges in Introducing Risk-based Supervision for Pension Funds (please note the version posted contains updated figures for the German pension system)
Just as other financial sectors have moved towards a “risk-based” approach to supervision, pension supervisory authorities are also looking to follow the handful of pioneer authorities which have adopted these methods, namely the Netherlands, Mexico, Denmark and Australia. Examining some countries that have learnt from these pioneers, this paper focuses on the experiences and challenges they have faced in adopting risk-based pension supervision.

N° 3 - 08/2007
Utilisation of Information Technologies in Off-site Supervision of Private Pension Systems
The increasing intricacies of private pension systems raise the importance of supervising these systems effectively. How can IT be used to do this? How can IT be integrated into an existing system? With a case study on Turkey, this paper lays out a field for discussion of this question, offering some initial suggestions for international good practise.

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.

N° 1 - 08/2007

A Review of the Pros and Cons of Integrating Pension Supervision with that of Other Financial Activities and Services
With the rise of large conglomerates offering a range of financial services, is a single agency the most appropriate means of sypervising financial intermediaries (banks, insurance companies, securities firms)? Should Pension Funds be supervised by such integrated authorities? Examining a range of arguments, this paper concludes that the answer depends on the context and environment of the pension system.


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