EUROPE - The European Union is unlikely to apply Solvency II regulations to institutions for occupational retirement provision (IORPs), the European Federation for Retirement Provision (EFRP) has said.
Speaking after the European Parliament adopted Rapporteur Ria Oomen-Ruijten's report, EFRP chairman Patrick Burke said he hoped the European Commission would carefully consider all evidence it was presented with, praising MEPs for drawing clear policy lines.
He said: "The EFRP is particularly satisfied that the European Parliament has recognised the specificities of IORPs bearing in mind that the risks in the insurance sector are different and that those differences should be reflected in the prudential regime."
The organisation's secretary general Chris Verhaegen added that she now doubted Solvency II would be applied to all pension schemes in the Union.
"My reading of the Parliament's work is that there is no and will be no majority in Europe to apply Solvency II type of quantitative requirements to IORPs.
"This becomes most relevant in view of the Call for Advice to EIOPA to review the IORP Directive.
"The way forward is to look at today's insights about risks as emerged after the financial and economic crisis and doubts arisen on government debt."
Joanne Seagars, chief executive of the UK National Association of Pension Funds (NAPF), also welcomed the recognition that any new legislation would need to be tailored to the long-term nature of pensions.
"The last thing we need is to make pensions more expensive by introducing new rules based on the Solvency II regime," she said.
"Such rules would work against what the European Commission is trying to achieve and would be damaging to pensions and individuals' retirement incomes."
Segars went on to praise MEPs for recognising the need of a detailed cost-benefit analysis before any changes were implemented.
Oomen-Ruijten's report notes that any pension reforms will result in substantial costs to member states, ones that are likely to be reflected in government debt levels and impact budget deficits.
The author also calls on member states to enhance the second pillar, or promote the creation of such a system where it does not exist.
The recommendation comes after Hungary all but abolished its second-pillar system, after funds were forcibly transferred into the state-run first pillar to reduce its budget deficit.
Additional suggestions echo those made by Verhaegen in a recent speech, calling for a common set of definitions for pension terminology, as well as a system that allows benefits to be traced across various member states.