knowledge | 21 December 2020 |

Pension Schemes and EMIR Clearing: Not Yet in the Clear

On 17 December 2020 ESMA1 published its second report (prepared in cooperation with the EBA, EIOPA and the ESRB2) on the clearing solutions for Pension Scheme Arrangements (“PSAs”) under EMIR3.  See here our briefing on ESMA’s first report on this issue.

Whereas ESMA’s second report reaffirms its strong commitment to a broad implementation of the EMIR clearing obligation, including by PSAs4, it also recognises that:

  • a number of measures (rather than an as yet unidentified “silver bullet” single solution) will be required to enable PSAs to clear their derivative contracts; and
  • more time is needed to develop and implement those measures in a manner that would, collectively, facilitate PSA clearing.

ESMA has therefore suggested that the current time-limited exemption from the clearing obligation for PSAs, which expires on 18 June 2021, be extended by one year until 18 June 20225 but has emphasised that all efforts should be made to implement measures to enable PSAs to clear their derivative contracts and avoid a further extension of the temporary exemption6.

ESMA has now submitted its second report to the European Commission and that report will serve as input to the Commission’s next reportassessing whether viable technical solutions have been developed for the transfer by PSAs of cash and non-cash collateral as variation margins and the need for any measures to facilitate those viable technical solutions.  Pursuant to Article 85(2) of EMIR, the Commission mayextend the current time limited exemption for PSAs from the EMIR clearing obligation twice, each time by one year, where it concludes that no viable technical solution has been developed and that the adverse effect of centrally clearing derivative contracts on the retirement benefits of future pensioners remains unchanged.  Ultimately, therefore, it will be the Commission that decides whether, as proposed by ESMA, to further extend the current exemption.


  1. European Securities and Markets Authority.
  2. European Banking Authority, European Insurance and Occupational Pensions Authority and European Systemic Risk Board.
  3. Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012, as amended.
  4. See paragraph 185 of the second report.
  5. See paragraph 184 of the second report.
  6. See paragraphs 177 to 179 and 185 of the second report.
  7. Under Article 85(2) of EMIR.
  8. By adopting a delegated act in accordance with Article 82 of EMIR.

This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

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