This is a welcome check to the integration of European pension systems, said pensions expert Alastair Meeks of Pinsent Masons, the law firm behind Out-Law.com.
In a report on its Quantitative Assessment of the Holistic Balance Sheet EIOPA said it "recognises the reservations of respondents with regard to the added value of a harmonised solvency regime for the protection of members and beneficiaries" and "concurs with the view that harmonised solvency rules should not be introduced at this point in time".
The pensions industry has been concerned about the work being done by EIOPA and the associated risk that the European Commission would introduce solvency standards based on those to be introduced for insurers, Meeks said.
"The UK's Pensions and Lifetime Savings Association estimates that EIOPA's proposed approach would result in pension scheme deficits increasing by £253 billion in the UK: a sum equivalent to more than three times the UK's national deficit for the last financial year," he said.
Instead, EIOPA has now proposed a European framework for risk assessment and transparency for pension scheme providers based on common valuation rules and a standardised risk assessment, analysing the impact of a set of common, pre-defined stress scenarios on the balance sheet to see how well security and benefit adjustment mechanisms work.
Schemes would have to publicly disclose the main elements of their balance sheet and the outcomes of the risk assessment as this would have a "disciplinary effect", EIOPA said.
A "proportionate" approach would let countries exclude schemes with fewer than 100 members from the framework.
"The EU's drive for ever-closer union was always controversial in pensions, where there is far more diversity of approach between member states than is found in most areas. The intensity of the opposition has resulted in this initiative being driven into the sand. It is perhaps no coincidence that this initiative has been scrapped before the UK's referendum vote, with the EU desperate to avoid giving its opponents new campaign material," Meeks said.
"EIOPA is pressing on to try for more limited harmonisation. It remains to be seen whether even this drastically scaled-back initiative will make progress. Right now, the centralising forces of the EU seem as weak as they ever have done," he said.