Applause, which started mildly but ended robustly, suddenly reverberated in a packed Berlin conference room a few weeks ago. An audience of industry experts, pension managers, associations and trade unions clapped at the suggestion that Germany’s BaFin regulator should avoid repeating its exercise on cost reporting for IORPs, initiated by the European Insurance and Occupational Pensions Authority (EIOPA), and implemented in turn by BaFin. The exercise was a disappointment, and an excessive, unnecessary effort for the German pension industry. 

Occupational pension schemes and associations representing their interests would rather steer clear from being tangled up in a chain of controls, rules and obligations that at times may overlap and, particularly on sustainability, put pressure on managers and in-house teams. 

Some raised the peculiarities of Germany’s traditional second pillar compared with other EU member states. This set of rules, products and history, it is claimed, is incomparable with those of other countries. And in a country like Germany, there seems to be little urgency to disclose the costs faced by retirement schemes. 

Beyond the national aspects of pension laws in Europe, one of the issues appears to be the very critical reception of action taken by European authorities. 

The current consultation on IORP II is likely to lead to a similar, perhaps fierce, debate on whether, and to what extent, the points under review fit the demands of pension funds in different EU states. Perhaps, thinking about members is one way to try to smooth away differences. Reporting investment, transaction, and administrative costs represents a way to make members aware of how a pension scheme is run in detail, even if costs are borne by sponsors. This will ultimately improve transparency. 

This article has been amended to remove an error introduced at the editing stage

Luigi Serenelli, DACH Correspondent
luigi.sernelli@ipe.com