The Czech government has warned the European Commission against harmonising pension investment rules, arguing that such rules should be left to individual member states.

In its response to the recently concluded Capital Markets Union consultation, the Finance Ministry welcomed the idea of changes to the private placement regime, endorsing the development of a common framework rather than further regulation.

“The result,” it said, “should not be revision of eligible assets for pension funds because the decision on setting a portfolio of eligible assets falls within the scope of competencies of the CZ [Czech Republic] and should not be harmonised by EU legislation.”

The comment comes after the Commission’s attempts to lift investment restrictions facing pension funds.

Under the revised IORP Directive, member states would no longer be able to prevent up to 70% of assets from being invested in shares, negotiable securities treated as shares or corporate bonds.  

However, the Czech Republic recently pushed ahead with the closure of its second-pillar pension system, which, following a change in government, is set to close in 2016 after being in place for just three years.

The comments are in stark contrast with those of the Polish Chamber of Pension Funds, which argued in favour of lifting investment restrictions as a means of diversifying investment risk facing members.

It noted that current rules restrict Polish pension funds’ ability to invest outside the country, and that, according to OECD data, only 1.4% of assets are invested outside of Poland.

“Lifting current restrictions,” its response said, “would help local pension funds diversify risk, thereby increasing consumer protection while ensuring these funds can be invested freely to support projects across Europe.

“Only Estonian private pension funds are invested substantially cross-border, with 75% of total assets invested in foreign investments.”

Polish second-pillar funds must invest 75% of assets in equities under changes pushed through by the current government