EUROPE - The European Parliament has called on the European Commission to encourage the financial industry to create a portable pension product.

In a paper adopted this week, Parliament stated the financial industry should  "develop pilot pan-European financial products such as pensions, mortgages, insurance products or consumer credit" and has now asked the Commission to prepare a "framework of regulation and supervision" to ensure "such products are portable and mutually recognised within the European Union".
"This is particularly important for the kind of people who are mobile, who know that they will move from one member state to another," Dutch MEP Ieke van den Burg explained to IPE.

She added this product should clearly identify the method of benefit calculation and the consumer protection involved.

Van den Burg, the rapporteur or MP appointed by the European Parliament to investigate the issue, explained the suggested product should "help solve the practical problem" of moving between member states.

"It might be feasible to develop this product If it is only targeted at this one group and not aimed at harmonisation," van den Burg added.

Differences in actuarial assumptions, legislation, taxation and benefit calculation between member states had been the major obstacles in the negotiations on the Portability Directive.

Portugal, which took over EU presidency from Germany on July 1 put the directive - which has already passed Parliament - back on the Council of Ministers' agenda for the December meeting.

The Council of Ministers announced in May it could not come to an agreement on the directive, the Netherlands being the main critic.

In the own-initiative report, the European Parliament also urged the negotiation of a solvency regime for pension funds and suggested it should be based on Solvency II and Basel II but take into account differences between insurance products and occupational pension arrangements. 

Van den Burg told IPE Parliament was afraid without a harmonised solvency regime pension funds might opt to operate in the country with the lowest level of regulations, as this could endanger savings.

A third proposal made by the European Parliament is the harmonisation of the tax treatment of pension contributions.

MEPs prefer the so-called EET model which means pension benefits are taxed while contributions are exempt.