EUROPE - The compromise of the Karas report to secure a majority in the European Parliament has come at a high price, according to Kees van Rees, chairman of the European Federation for Retirement Provision (EFRP).
In the EFRP’s response to the Karas report, van Rees argues that by deviating from the European Commission’s financial services logic and shifting to a social reform influenced directive, the EP has rendered much of its directive proposals ‘unworkable’.
The inclusion of proposals relating to biometric risk cover and the guarantee on redemption of pensions paid, argues van Rees, will hinder the development of pension funds instead of promoting them.
He adds: “It also demonstrates the EP has not fully grasped the fundamental difference between a DC plan and a DB plan. If an employer does not want to fund or offer a DB plan, then the ‘Karas solution’ will not turn the DC plan into a DB plan by asking the price for a biometric risk cover or for a guarantee of ‘money back’.”
The EFRP says it supports the EU Commission in saying that the directive should not regulate the products offered by pension funds, nor define the precise the precise arrangements for the payment of benefits.