The holistic balance sheet as a building block in pension fund supervision

In its advice on the review of the IORP Directive, EIOPA proposed the holistic balance sheet (HBS) as a new and innovative way to assess pension funds in a harmonized manner (EIOPA 2011). Not only traditional financial assets and liabilities, but all steering mechanisms available to the pension fund should be taken into account. EIOPA considers using the HBS as a supervisory tool for all European pension funds that involve risk sharing and guarantees. The HBS and the valuation of steering mechanisms are new concepts and so far only in the very early stages of development. It is therefore necessary to analyze whether the intended use is feasible and what challenges lie ahead. In this paper, we make a first assessment of the possibilities of using the HBS in pension fund supervision.

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