By Dimitris Katsaganis
To take a leap forward, it would seem that the 2nd pillar of insurance in Greece – ie the Occupational Insurance Funds (TEA) – is preparing immediately after the elections.
In parallel with the continued implementation of new IORPs, the completion of the consultation process by the European Supervisory Authority (EIOPA) of the operators of the professional insurance market for the revision of the 2nd Directive on the institutions of occupational pensions – IRP II (IRP II) is expected later this month, further institutional changes in the operation of the TEAs towards the end of the year, while the ongoing institutional approach between the 2nd (TEA) and the 3rd pillar (private insurance) is remarkable.
– Regarding current developments on the front of the creation of new TEAs, according to valid information from Capital.gr, an application has been submitted to the relevant Ministry of Labor for the granting of a TEA license by the listed company Epsilon Net, while the Panhellenic Pharmaceutical Association’s TEA status is in the final stages of approval.
Also in this year the path of submission of a statute and subsequent authorization by the Ministry of Labor should be followed both by large professional groups of specific sectors of the economy and by companies, with the more mature case of a large listed company in the energy sector.
– As the total number of voluntary insurance TEAs increases (from 25 in 2021 to 29 in 2022-2023) and as the presence of the 2nd pillar is consolidated across the country’s insurance map, it is expected new institutional framework that will incorporate the necessary changes based on international experience, for its further substantial development.
The outgoing government had drafted legislative amendments, but did not proceed with its adoption as a bill, due to the announcement of the forthcoming national elections.
These would concern, among other things, the unification of the TEA’s control regime and the possibility of creating multi-employer funds.
The possibility of establishing an TCA with the participation of more than one company has been “locked out”, whereas with regard to new supervision of AMEs (in collaboration with TEKA), THE central final selection, as indicated by valid information from Capital.gr, is that he will be assigned to the Bank of Greece.
With this option, the existing, fragmented and inefficient framework of the triple guardianship (Ministry of Labour, National Actuarial Authority, Capital Market Commission) of professional funds will come to an end. The aforementioned legislative changes are permanent requests from the management of the AETs, as well as from their collective body, ELETEA, while to these may also be added the request for the establishment of statutory rules for the approval of new statutes or the modification of existing statutes, but also for the general audit and approval procedures necessary for the approval and proper functioning of TEAs, the request to strengthen tax incentives for retirement benefits and to maintain the attractiveness of tax incentives for one-off benefits from TEAs, as well as the demand for increased degrees of freedom in managing investments and access to life cycle products for policyholders of professional funds.
– Regarding developments at European level, the authoritative sources of Capital.gr report that by the 25th of this month, the ongoing consultation process of the 2nd Community ISP Directive (TEA) led by the European Insurance and Occupational Pensions Authority (EIOPA) should be completed with the operators of the professional insurance market of all EU Member States, with the aim of improving the revision of the said directive on the basis of the experience of its application on the European market in previous years and recommendations from 2nd pillar operators for this orientation. The indicative issues that are the subject of the above consultation are the adequacy of IORP II in terms of prudential supervision and governance, the cross-border activity of TEAs, the adequacy of policyholder information, the adoption of proportionality in supervisory requirements, investment management rules and prudential supervision requirements for the inclusion of diversity and inclusion issues in the governing bodies of TCAs.
– In parallel with all the above processes (implementation of new ETAs, evolution of the national institutional framework, revision of the European directive) a cycle of institutional meetings between the representatives of the insurance capitalization pillars, i.e. the 2nd (TEA) and the 3rd pillar (private insurance), in order to develop a common approach to the basic institutional demands that concern them and to constitute documented political proposals which should lead the professional and private insurance markets towards a development trajectory, provided they are accepted and adopted by the next political direction that will emerge from the elections of May 21st.
The main objective of the above actions is to strengthen the insurance awareness of Greek society, the penetration of the culture of insurance and savings into the culture of Greek citizens and the substantial increase in share of capitalization pillars (beyond the current accumulation of 6% to strengthen the overall diversification of risks and the viability of insurance) in the existing insurance system, in which the 1st public pillar, distribution occupies a position quasi-monopoly.
What does the annual report of the Capital Market Commission contain?
According to the Securities and Exchange Commission’s 2022 Annual Report, released last week:
1. The Assets of the 29 Professional Insurance Funds (excluding any real estate) having communicated data within the framework of the exercise, with the reference date 31/12/2022, amount to 1,813,060,024 euros and are reduced by 1.4% compared to 31/12/2021.
2. The Assets of the 4 Mandatory Insurance Funds with a reference date of 31/12/2022 amount to 1,545,203,289 euros and are reduced by 5.41% compared to 31/12/2021, whereas they represent approximately 85.2% of the total assets of the professional insurance funds.
3. The Assets of the 25 IESP-TEAs with a reference date of 12/31/2022 amount to 267,856,735 euros and are up by 30.45% compared to 12/31/2021, while they represent approximately 14.8% of the total assets of professional insurance funds.
4. Based on data reported by TEA and IESP-TEA, the weighted average performance of portfolios under management for the year 2022 was approximately -8.6%.