6 Feb 2019
| Par Olivier Cornet, Director UK & Ireland | Invoke Software Ltd

A new reporting obligation has been introduced for pension funds, as part of the IORP II Directive (IORP - Institutions for Occupational Retirement Provision). Starting in Q3 2019, a part of the pension funds population in Ireland will be required to file a specific set of reporting templates in XBRL format to their National Competent Authorities (NCA), namely detailed data on members, assets and liabilities, on both a quarterly and annual basis. What should pension funds focus on to achieve timely compliance with the new regulation?

  • Insurance regulatory reporting
  • IORP II
  • Pension funds

Irish regulatory background for IORPs

The IORP II regulation is mandatory for all pension schemes resident in Ireland and consists of two types of regulatory requirements:

  • Statistical reporting requirements
  • Supervisory reporting requirements

Statistical reporting requirements stem from the European Central Bank’s (ECB) regulation adopted on the 26th of January, 2018 (ECB/2018/2). The Central Bank of Ireland (CBI) will be in charge of collecting this statistical information from Irish pension funds and to report it to the ECB.

As for Supervisory reporting requirements, they are related to the Decision of Board of Supervisors on EIOPA’s regular information requests towards NCAs regarding the provision of occupational pensions information (EIOPA-BoS/18-114, published 19 April 2018). In Ireland, the Pensions Authority will be in charge of collecting the individual supervisory information from pension funds and then report aggregated data to EIOPA. 

The table below provides an overview of the regulatory context in Ireland:

ECB / EIOPA Reporting Requirements
Regulatory RequirementStatisticalSupervisory
European RegulatorECBEIOPA
NCACentral Bank of IrelandThe Pensions Authority
Regulated EntitiesDetailed Data Reporters
Reduced Data Reporters
Not communicated yet

Therefore, for CBI statistical reporting requirements, pension funds are split into two reporting populations in Ireland:

The table below focuses on the CBI statistical reporting requirements for the two populations of regulated entities:

CBI statistical Reporting Requirements
 Detailed Data ReportersReduced Data Reporters
Reporting FrequencyQuarterly and AnnualAnnual
Reporting FormatXBRLExcel
First submission9th of December 201919th of May 2020

The CBI must have at least 75% of total assets captured in full details, rising to 80% in 2022. As per the Solvency II requirement, IORPs will need to report in XBRL format.

This is a very large undertaking for industry, with a serious challenge coming this year.
Central Bank of Ireland
About IORP II Directive in Ireland

 

What challenges are Irish pension funds facing?

IORP II will impose an unprecedented reporting burden on pension funds and will highlight a number of significant challenges.

The main challenge relates to data governance and collection. Pension funds will need to correctly identify gaps in their data to ensure that the information submitted to the NCA is appropriate, complete, and accurate. The process of identifying data gaps and discrepancies is crucial to enhance data quality and ensure it will be available in time for reporting.

Particular emphasis is around asset data collection to comply with the asset templates required by the regulator (i.e. 06.02 and 06.03). Typically, experience has shown that pension funds will receive data in multiple formats with incomplete data and in a different framework, which does not meet the XBRL requirements. 

Partly due to the tight timescale, labour-intensive manual approach to data collection should be avoided as much as possible, to allow for better compliance and data control throughout the process. Indeed, checking reports at the end of the process can be very time consuming (XBRL automated validations).

Maintaining compliance also needs to be considered as one of the primary challenges that pension funds will face shortly. Indeed, the XBRL framework can be updated and released up to twice a year, embedding regulatory changes. This implies that companies will have to closely monitor regulatory developments and XBRL taxonomy releases to achieve sustainable compliance.  

IORP II requires all pension funds to report in XBRL format (eXtensible business reporting language), which some of them might already be familiar with. XBRL offers manifold advantages with regards to regulatory reporting, but it can also add further complexity to the reporting process, thus requiring additional in-house expertise.