The European Federation for Retirement Provision (EFRP) launched a Central & Eastern European Forum (CEEC Forum) at a meeting in Bratislava, Slovakia, on 7 March.
The forum is designed to bring together representatives from existing EFRP members from the pre-eastward enlargement EU and from private pension institutions operating the mandatory and voluntary schemes established over the past decade by the new EU members.
The forum was a strong statement by the EFRP towards the central and eastern Europe pensions industry, EFRP chairman Jaap Maassen told the inaugural meeting.
When Maassen took over the presidency of the Brussels-based EFRP in October 2004, less than six months after the enlargement of the EU and less than a year before the EU pensions directive was to come into force, he said that opening up to the new members was one of his targets. “The basic reasons why the forum could be useful for both east and west Europeans is that their supplementary systems are radically different,” said Csaba Nagy, president of the Hungarian Association of Pension Funds who was named chairman of the CEEC Forum.
“The west Europeans primarily have occupational pension funds and this definition is not yet accepted in central and eastern Europe. We launched our third pillar pension funds, our voluntary pension funds, earlier but they can be used by both employers and employees and so they are a combination of individual pension savings and employers’ contributions.”
“While the systems may look alike they are totally different,” said Chris Verhaegen, secretary general of the EFRP.
“There is a lot of work to be done to bring more convergence between the new member states and the older members. Rightly or wrongly the EU-15 thought that the EU-10 would adapt to them, and the EU-10 have found that the EU-15 still have to do the pension reform that they have done already. So there is a real need for a dialogue because ultimately it is one union and we have to make sure that the system will work.”
The inaugural meeting was hosted by the Slovak Association of Pension Funds Management Companies and was attended by representatives from the Czech Republic, Estonia, Latvia, Lithuania and Hungary in addition to those from Slovakia. Croatia, which has applied for EU membership, was also represented. Slovenia and Romania have also joined the CEEC Forum as has non-EU member, Kosovo. Bulgaria has opted for observer status.
“It is really very useful because it provides an arena to discuss the still many practical differences,” Saulius Racevicius, president of Lithuania’s investment management companies association.
“Just taking the EU directive as an example we found that everything was about problems and solutions relating to the old member countries. The contacts are valuable because it is important to recognise that we have some practical differences and that they should be taken account of when there is any consideration of EU policy on pension funds.”
Racevicius adds: “While we are maybe very small in terms of assets and investment management, in terms of participant numbers we are huge. So it’s a great initiative to start discussions. The people heading the EFRP really take this kind of process very seriously.” “We decided to take part in the forum as an open platform for discussions before possibly considering applying for full membership of the EFRP some time in the future,” said Jiri Rusnok, chairman of the Czech pension funds association.
Hungary is already an EFRP member. “When we joined the EU I suggested to my colleagues that it was necessary to join the EFRP because if you are joining a club you need to know how the club works, so you have to know the rules and regulations,” said Nagy.
However, the Polish association, which was also an EFRP member, recently left having found after two years that the EFRP’s focus was almost exclusively about western European-type of occupational pension issues.
It is expected that the CEEC Forum will go some way in redressing the balance. However, although invited to the Bratislava meeting, the Poles did not respond.
Nevertheless, the EFRP still has its attractions. The Slovak Pension Fund Association, which hosted the Bratislava meeting, is in the process of applying for EFRP membership. The question still has to be approved by the general assembly.