The Possibility of Requirements Introduction of Solvency II to Non-State Pension Funds' Operation

<p>Non-state pension funds play an important social role in the provision of pensions and are a source of long-term investment of pension accruals and reserves. In this regard, the government should regulate the activities of NSPF, ensuring timely and full implementation of obligations to depositors and pension insurance participants. The primary performance indicator of pension accruals investment and the proper functioning of NPFS is its solvency and long-term financial stability. Evaluation of these indicators is based on the solvency capital requirements.</p><p>Aim of this study is to analyze the capital adequacy of non-state pension funds and the possibility of its evaluation as required by Solvency II. Necessary to answer the question whether a pension fund has the capital, allowing to ensure the safety of solvency with probability 99.5% according to the requirements of Solvency II. The work displayed specificity of non-state pension funds and the inconsistency of existing laws and their stated requirements in relation to the solvency capital formation in NSPF. For capital formation, satisfying the requirements of Solvency II, it is necessary for NPFS to develop a system of risk management and quantitative risk assessment methodology. Reference to a particular NPF &laquo;N&raquo; there &nbsp;were calculated capital required to cover unexpected losses on the basis of market risk as the most significant.</p><p>The results showed that not all &nbsp;funds ready to implement the requirements of Solvency II. This is due to a mismatch of the actual funds, formed under the law, to capital, calculated taking into account the risk-based Value-at-Risk. To avoid bankruptcy and denial of licenses large number of NPFs need measures to progressively implement the requirements Solvency II. Measures that would allow non-state pension funds to adapt to the new requirements should be mandatory introduction of a risk management system in the NPF, including foreign experience and expertise of the funds, already clicked on a voluntary basis to the principles of risk-based supervision; mandatory disclosure and transparency of the pension market. Only under these conditions it is possible to apply the Solvency II requirements to NSPF activity.</p>