Investment fund association EFAMA has proposed a European personal pensions account to ease cross-border portability of pension rights.
The Brussels-based group, the European Fund and Asset Management Association, says the idea would build on the concept of personal accounts in countries such as Ireland, German and Sweden under the framework of the European directive on occupational pensions. The accounts would comprise assets such as investment funds, insurance and securities.
EFAMA, which last year called the directive “discriminatory”, sees the idea as a way for investment funds getting involved in the retirement provision market. It has complained about the lack of a “level playing field” in the area. It says the idea supplements existing collective pension schemes.
The vehicles needn’t have a separate legal identity but would benefit from tax relief under the terms of the directive on Institutions for Occupational Retirement Provision, as well as articles covering protection of assets, said EFAMA president Wolfgang Mansfeld, who has since come to the end of his term of office at EFAMA.
He said in London that the new proposal would see an entity – a ‘European Personal Pension Institution’ – as an authorised institution set up to operate the scheme.
Mansfeld said it was not clear whether such institutions would gravitate to domiciles such as Dublin and Luxembourg as they have in the investment fund market. Asked whether the idea was merely a way to promote investment funds, Mansfeld said: “Clearly we think investment funds should play key role.”
The idea is that a financial institution such as a bank, or a company or even an industry sector, would be able to set up such an institution. Social partners such as unions could have a role.
Another idea is that the institution would have a ‘beneficiary’ advisory committee’ to help select members’ investment options and make sure the terms of the IORP directive are met.
Mansfeld was unclear about the role of employer contributions under the proposed new regime. He said the new proposal would most likely suit small- and mid-sized firms – not a steel mill with 5,000 employees.
He said EFAMA has “started a dialogue” with European Commission on the matter. It is talking with the labour market and internal markets directorates at the Commission.