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German industry fears IORP II will be 'stab in heart' for company schemes

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  • Düsseldorf, Germany

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The German pensions industry has again voiced fears regarding the impact that IORP II, the revised directive on occupational pension schemes, will have on their business.

Speaking at the Handelsblatt conference on occupational pensions, Georg Thurnes, a board member at Aon Hewitt Germany, asked Klaus Wiedner, head of the pensions and insurance department at the European Commission’s Internal Market and Services Directorate General, about one of the regulations appearing in a recently leaked draft of the new IORP directive.

The regulation in question would prevent companies from running parts of the administration of their pension plans themselves.

“This would be a major blow to company pension schemes, as, currently, the employer is often taking on administration and with it the costs of running the pension plan,” Thurnes said.

Bernhard Wiesner, senior vice-president of pensions and related benefits at Bosch Group, agreed the regulation would “deal a blow to the heart of company pension plans”.

Wiedner replied that there might actually be a conflict of interest if the risk management of a pension plan was run by the company’s treasury department, as employers want to keep contributions to the scheme low.

“That is why we had the discussion whether or not this should be allowed,” he said.

“Over the past few days, there have been a lot of debates regarding this, to assess whether it should be allowed in certain cases – but you will have to wait and see what Thursday brings [referring to the date scheduled for the release of the final version of the revised IORP II Directive].”

Yet German industry representatives remain highly sceptical, with Wiesner even fearing “massive disadvantages” for German IORPs due to the new directive.

Similarly, Gabriele Lösenkrug-Möller from the German Social Ministry promised that the government – “together with our European partners” – would do “everything possible” to prevent the directive from weakening occupational pensions.

Another German fear is the perceived lack of understanding in Brussels regarding the socio-political status of German occupational pensions, as opposed to pure financial service providers.

However, Wiedner stressed that, even if occupational pensions were rooted in a country’s social framework, they would require “a minimum of governance regulation”.

He said EIOPA had “learned from the quantitative impact study” that, in some member states, “occupational pensions have governance problems”, without naming the member states.

“Some member states withdrew their results to prevent them from being published because they were so bad,” he added.

Therefore, EIOPA “will conduct further studies to better highlight problems”.

Wiedner also noted that, while it had been a political decision to leave out capital requirements from IORP II for the time being, “EIOPA always was of the opinion that solvency regulations for occupational pensions is necessary”. 

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