Pension fund data reporting pressing ahead in Europe. All quiet in the UK.

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European pension funds over €1 billion have about a year before they need to start reporting large quantities of data that may be difficult to source and clean, possibly in a data format they have never used before, and on a quarterly basis. Unless they’re in the UK... maybe.

In April, EIOPA announced the requirement for occupational pensions funds to report data through to their National Competent Authority (NCA), for example The Pensions Regulator in the UK.

It’s unlikely that pension funds already have a lot of this data to hand on a quarterly basis, and with the relatively short implementation window (it comes into effect in Q3 2019) schemes may find there aren’t many trustee meetings between now and the first deadline.

Across Europe, NCAs are putting out announcements and pension funds are getting ready. In the UK, it’s a slightly different story. With Brexit and uncertainty over transition arrangements, it’s unclear whether The Pensions Regulator will require pension funds to adhere to the new requirements, and if they do in what format they will collect the data.

At FS Assist, we maintain a suite of products for insurance and pension fund reporting.

IORP Reporter, our Microsoft Excel-based pension fund reporting solution, makes reporting as easy as filling in a spreadsheet.

What’s Required?

Under the new requirements, pension funds with a balance sheet total of over €1 billion will need to submit quarterly data reports to their NCA, along with a fuller annual report. The first quarterly report will be effective at 30 September 2019 and must be submitted by the NCA to EIOPA within 10 weeks (and so pension funds may be given a shorter deadline by their NCA).

The reporting requirements are clearly based on Solvency II, and although the granularity is greatly reduced in some areas and no onerous additional actuarial calculations will be required, some of the headaches of Solvency II reporting remain.

Quarterly data:

  • Basic information (PF.01.02)
  • Balance sheet information (PF.02.01)
  • List of assets – line by line (PF.06.02)

Additional annual data:

  • Investment funds – look through approach (PF.06.03)
  • Investment income (PF.09.02)
  • Changes in technical provisions (PF.29.05)
  • Member data (PF.50.01)
  • Contributions, benefits paid and transfers (PF.51.01)
  • Expenses (PF.05.03)
  • Cross border activities (PF.04.03)

Much of this information should be easily available from administrators and actuaries where quarterly monitoring is likely already in place for large schemes.

However, the list of assets and look through templates have the potential to contain very large amounts of data, as they require a line by line listing of all assets held, and where the scheme invests in funds these must be broken down by investment type and currency.

The asset data ruffled quite a few feathers in Solvency II reporting. Many fund managers are now used to the idea that they have to provide this information, but it still may come as a surprise to some managers—for example fiduciary managers—and presumably a lot of schemes.

The required templates can be found in Annex I of the consultation response, starting on page 15.

Why Does Data Format Deserve Its Own Heading Like This?

The data needs to be reported from the NCA to EIOPA in a format called XBRL (eXtensible Business Reporting Language). XBRL is an XML standard that’s used a lot for financial reporting (e.g. Solvency II). It’s not the easiest data format to understand, but it is standardised and machine readable which is why EIOPA likes it.

EIOPA doesn’t specify how pension schemes must get this data to their NCA, this is for the NCA to decide. For Solvency II, the Prudential Regulation Authority (the NCA for insurance in the UK) collects the data from insurance companies in XBRL format.

Across Europe we are seeing NCAs request the data from pension funds in XBRL format. So far in the UK, The Pensions Regulator has not said what it will be asking for, if anything.

XBRL is gaining popularity but it’s not that friendly to work with, and if pension funds are required to report in XBRL format then they will need help.

What Should Pension Funds Do Now?

In order for the reporting to go smoothly, we would recommend the following:

  • Speak to asset managers to make sure they can provide you with all the information you will need. In the case of funds, this may require a new contract or non-disclosure agreement to be put in place as funds may view the breakdown of their underlying investments by currency and asset class to be intellectual property.
  • Arrange with your administrators to get quarterly membership figures.
  • Speak to your actuaries regarding the quarterly technical provisions figures.
  • If you need to report in XBRL, then get yourself an XBRL reporting solution, for example IORP Reporter from FS Assist

UK pension funds may like to wait for an announcement from The Pensions Regulator before taking any action.

For more information about FS Assist or IORP reporting, or for a demonstration of our software, please contact us.