EUROPE - The European Commission has called for advice from the European Insurance and Occupational Pensions Authority (EIOPA) on how to improve legislation introduced in 2003 to create a pan-European framework for occupational pensions.

Poor take-up, an increased focus on risk in the wake of the financial crisis, and the relative growth of defined contribution schemes have all contributed to the need for an overhaul.

Since the framework came into force, only 80 IORPs have been formed in a potential market of more than 140,000 schemes. The Commission hopes the review will result in simplified legal, regulatory and administrative requirements for setting-up cross-border pension schemes - including those defined contribution schemes not currently covered by the legislation.

The Commission also intends to introduce EU-level risk controls to the regime in the wake of the recent financial crisis. It "intends to propose measures that would allow IORPs to benefit from the risk-mitigating security mechanisms at their disposal", said the request.

The 62-page document acknowledged that the original IORP legislation had failed to take into account the prevalence of defined contribution schemes, which effectively shift risks onto pension holders - hence its decision to seek specific advice on how to modernise prudential regulations for IORPs that operate DC schemes.

"The main aim of public policy in the area of pensions is to ensure the sustainability of public finances and an adequate retirement income," said the Commission - an aim it said was best served through the facilitation of cross-border pension activity and EU-wide risk-based supervision.

"Pension schemes and pension products containing similar risks should be subject to similar regulatory requirements," said the Commission, not least in order to eliminate regulatory arbitrage "between and within financial sectors".