OECD-IOPS Guidelines on the Licensing of Pension Entities

Developed jointly by the OECD and the International Organisation of Pension Supervisors (IOPS), the Guidelines on the Licensing of Pension Entities were approved by the IOPS in November 2007 and the OECD Council in March 2008.

The OECD-IOPS Guidelines provide a framework for licensing regulations and the assessment of licensing applications from pension entities to determine whether or not they stand up to certain criteria: adequate governance structures, management in the best interest of plan members and other beneficiaries, financial security and performance of pension entities and maximimum operational efficiency. The Guidelines set requirements relating to starting capital, funding policy, risk management mechanisms, governance structure, and investment policy. They outline the circumstances in which a licence to operate may be withdrawn. The Guidelines also list the powers that licensing authorities should have at their disposal when assessing licence applications.

The OECD-IOPS Guidelines are the first such standard at the international level on pension licensing regulations and licensing powers of pension supervisory authorities. They reflect the views of the OECD and the IOPS (www.iopsweb.org). The latter is an independent international body representing over 60 jurisdictions involved in the supervision of private pension arrangements. The OECD body that developed the guidelines, the Working Party on Private Pensions, brings together delegates from 30 OECD member countries and seven other countries (Brazil, Chile, Estonia, India, Israel, Russian Federation, South Africa) as well as several international organisations with observer status. In addition, the draft text of the Guidelines on the Licensing of Pension Entities was made available for public comment through an online consultation between 26 July and 5 October 2007. Comments received were considered by the IOPS and the OECD.

The Guidelines are primarily addressed to regulators and supervisory authorities involved in setting licensing requirements for pension entities as well as those authorities actually involved in the process of licensing pension entities.

Documentation

• News release: OECD and IOPS set out blueprint for a licensing regime in the pensions industry, 5 May 2008
• OECD-IOPS Guidelines on the Licensing of Pension Entities, March 2008 
• Comparative report, summarising the licensing approaches in over 30 OECD and IOPS countries, provides background information to the draft Guidelines
• Results of the public consultation