EC officials warn against too high expectations
Responding to the report, John Mogg, director-general of DGXV in Brussels, underlined the great interest of commissioner Bolkenstein on the supplementary pensions question, but reminded delegates this was not an issue of preaching to the converted.
He said: “It is not a case of talking to those who are convinced already. This is not only a market opportunity, it is also an issue for unions and member states. Getting the technical part right is fine, but we also have to negotiate a political solution.
“The report comes at a good time though, because the regulatory principles are currently under scrutiny. In a number of EU countries we need to convince regulatory authorities that change is for the better.”
He added: “We still have a long way to go, though, before pan-European pension provision can become a reality.”
However, Mogg pointed out that the ball game had changed with both the euro and disintermediation of pension provision from the first pillar to insurance, pension and investment funds.
Evidence, he said, came from figures showing EU pension fund assets set to rise to e2.1bn by the end of 2000 from Ecu1.6bn in 1997.
Mogg noted the EC directive would have four main objectives; to protect members and beneficiaries, ensure retirement provision institutions do not suffer from unnecessary investment and management restrictions, ensure a level playing field between providers, and to take a “step” towards cross-border pension scheme affiliation.
The last point, he conceded “will be possible only with fiscal harmonisation”. He also said that pension regulation and supervision were not only a question of security, but that pension arrangements needed to be efficient and affordable.
“If the price of security is too high, then pension funding can either be discouraged or be inefficient. As a result, it would become more difficult to diffuse the pensions time-bomb and it would undermine the competitiveness of the EU industry.”
And, while praising the report, he pointed out that it was not a given for Commission adoption.
David Deacon, head of unit: insurance, pension funds and external aspects of financial services in DGXV and chairman of the conference, said the directive would be produced by mid-2000.
Of the Pragma report, he said: “If anything, the report is so thorough that it is probably too detailed. We will be looking for more harmonisation to begin with. You have to remember that it took 30 years to get to this point with the life insurance industry.”