EUROPE – The European Federation for Retirement Provision (EFRP) has come out strongly against proposals by the European Parliament (EP) to create a level playing field for supplementary pension scheme providers, claiming that the Karas report gives life insurers ‘special advantages’ when operating in the occupational pensions’ market.
In its response to the Parliament’s unanimous vote in favour of the Karas report, the EFRP says it believes the directive should be limited to financial institutions used for supplementary pension funding that do not already have an EU framework for prudential supervision.
The association notes that the banking, insurance and UCITS sectors all have existing legislation in this area.
The association’s ire is particularly directed at the life insurance sector, which has been accused of powerful lobbying at the European level:
“ The EP is inclined to grant life-insurers themselves the option to decide whether to operate for their pension business according to the life insurance directive or the IORP directive. The life-insurers would be able to decide whether they want to operate such business in a separate legal entity – with full compliance under the IORP directive – or, alternatively to ring-fence the “pension business assets” and have a selective set of rules from the IORP directive applied to those ring-fenced assets.”
EFRP chairman, Kees van Rees says the directive should also be scaled back in line with the original Commission proposal and include the elimination of all benefit related requirements.
“ This is needed if the directive is to become an effective tool in developing pension funds in the EU and, more in general, to promote occupational pension funding in a cost effective way,” argues the EFRP.
The EFRP, however, says it supports the references by the Karas text to the prudent person rule and welcomes the commitment to phase out quantitative investment rules.
The lobby group also embraces the EP proposal to grant certain flexibilities in defining funding requirements and solvency margins, which it points out are particularly relevant in the context of the on-going debate on the Myners review in the UK.