BRUSSELS - The European Commission has issued a tender for a study on how current products on the EU market that convert accrued assets in pension funds into annuities are developing and whether they are adequate, modern and sustainable.
The directorate-general employment, social affairs and equal opportunities said the study should focus on existing legislation on "the provision of converting accrued rights in to incomes across all member states".
It should also give an overview of the type of products available and report on how much choice, information and protection exists for individuals. It should also assess the future development of the pension market and conversion products, and "the associated risks".
The Commission also wants to know more about cross-border provisions for pension payouts where they are in existence.
"Funded pension schemes are projected to play an increasingly important role both in member states' social security systems and as part of second and third pillar pension provisions," the commission noted in the tender document.
It added that the shift from defined benefit to defined contribution schemes has increased the need for products which convert accrued assets into retirement incomes. "The Commission seeks to improve its understanding of this development and its impact on the three objectives of sustainability, adequacy and modernisation."
Leonardo Sforza, head of research and EU affairs at Hewitt in Brussels, told IPE that these studies are not unusual for the Commission. "It wants to see to which extend the market can ensure financial security at retirement," he said.
Sforza added that the study would not necessarily lead to any binding recommendations or rules by the EU. The directorate-general confirmed to IPE that "the information will be used as background information in the preparation of reports on pension". A spokeswoman added: "Indeed the Social Protection Committee mentioned several times the importance of gathering more information on privately managed pension provision."
The study is expected to cost €40,000. The report should be filed at the end of 2007.
The deadline for participation in the tender is April 16.