European pensions-tracking service must add value 'without legislation'

A European pension tracking system must be low-cost and offer sufficient “added value” to entice providers to join rather than rely on statutory underpinning, the European Commission has been told.

Compiled by the TTYPE project – short for Track and Trace your Pension in Europe – the report concluded that a not-for-profit entity partially funded by the Commission should be launched to coordinate a European tracking system (ETS), which would build on existing tracking services put in place by member states.

The report comes two years after the Commission asked the Finnish Centre for Pensions (ETK), Denmark’s PKA and four pension managers from the Netherlands – PGGM, APG, Mn and Syntrus Achmea – to investigate the feasibility of an ETS, building on their experience with national tracking systems.

TTYPE urged the Commission not to use legislation to establish the ETS, pointing out that a “bottom-up” voluntary approach had received broad support among the stakeholders with which it consulted.

“However, it cannot be ruled out that, in some countries, legislative measures can be helpful or even necessary to enable providers to connect to the ETS,” the report added.

It suggested that any such steps should be decided by individual member states.

To ensure support for the project in the absence of a legal framework, the report proposed it adhere to four principles.

With an eye on data-protection concerns, it was suggested that the ETS draw up a privacy policy but also ensure that the individual controlled the use of personal data shared through the portal.

The proposed ETS would not retain any data on individual pension entitlements but rather use each provider’s method of authentication to request the information each time a user logged in to the ETS.

Matters of data protection were previously raised by the Actuarial Association of Europe as a potential stumbling block.

In a recent paper, the organisation noted that the unique identifier used in many countries to track pensions could only ever be used by a government-controlled entity.

Additionally, it would be made clear to users that any data displayed through the ETS was only to be used for information purposes rather than as the basis for a claim, with the responsibilities of both provider and the ETS laid out in a binding contract.

The report further proposed that the governing body, called STEP, would include representatives from unions, pension providers, existing tracking services and the Commission on its board to ensure ongoing support.

It said that, in instances where a national tracking service was not in place – such as Spain, Portugal or Italy – the ETS could either take the place of a national provider or assist in the launch of a national system.

The report accepted that while it hoped it had presented a feasible solution, this was not the same as one that could be successfully implemented.

“In the end, the success of the ETS will be measured in terms of its usage, finding lost beneficiaries or raising mobility figures, rather than in terms of functionality,” it said.

It speculated that, even if it only captured workers who had already worked in a second member state, it would cover 8m people.

Steven Janssen of the Belgian tracking system SIGeDIS previously cautioned the Commission that it should not be overly ambitious in its plans for an ETS.