The dearth of cross-border pension funds must be addressed by the revised IORP Directive, according to the MEP in charge of the legislation.
Brian Hayes, rapporteur for the European Parliament’s Economic and Monetary Affairs committee (ECON), returned repeatedly to the issue of cross-border during a speech at the PensionsEurope conference in Brussels.
The Irish MEP reasoned that the growing number of cross-border workers would warrant the growth of cross-border provision, but also that funds raised to back effective cross-border schemes could benefit the economy as a whole.
Hayes said the current cross-border framework was “a heritage nightmare” and “a case of a regulatory framework that is bizarre”, arguing it was a “key issue” that needed to be resolved.
He advocated revisions in IORP II to encourage the take-up of cross-border operations and asked why European multi-national corporations, unlike their US counterparts, performed so poorly.
During a later panel, a senior official from the European Commission was questioned over the current stipulation that cross-border funds should be fully funded at all times.
Jung-Duk Lichtenberger of the Directorate General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) explained that, if there could be no harmonisation of solvency rules, absence of the full funding rules would result in a “race to the bottom”, likely due to a drive to re-locate to jurisdictions with more relaxed regulation.
Lichtenberger questioned whether a minimum harmonisation of the 28 EU member states’ pension regulation was “too much of an administrative burden”.
Hayes said the matter of solvency inevitably required not only his attention but the attention of questioners from the floor.
He echoed a comment from a recent parliamentary hearing, noting: “Remember, we are dealing with other people’s money – money they are putting aside.”
Answering a question later on, Hayes added: “We have to take the responsibility for getting more people to take up pensions, and I don’t see EIOPA’s [the European Insurance and Occupational Pensions Authority’s] involvement as some kind of negative issue.”
Separately, he said EIOPA was “an important player, but, at the end of the day, it is the European Parliament and the Council [of the EU] that decides on legislation”.
At another stage, he described the Directive as a “minimum act”.
“We do not need to strangle member states on the matter of [excessive legislation].”
More generally, he said that, “broadly speaking, we are working on a consensus position in the European Parliament”.
Hayes also touched on the matter of professional qualifications, a contentious issue in the UK and other member states that allow lay trustees to oversee schemes, and said he was aware of the concerns.
He said he expected to have completed his own report to ECON by the end of July, to be followed, by late November or early December, by a final report from the committee.