With the deadline for responses set for New Year's Eve this year, the pensions industry has a long time to reply to the green paper.

Industry representatives will hold meetings on the issue over the next few months, but the EFRP has welcomed the fact that the Commission draws much of its thinking from the EFRP paper 'European Pension Funds: Their Impact on European Capital Markets and Competitiveness' published last year.

Alan Broxson, chairman of the EFRP, describing the paper as hugely important said: If we can ag-ree what prudential standards should apply it will help us to put together a directive that will be ac-ceptable across Europe."

"We are very happy that it has recited some of the findings from the EFRP report."

The inclusion of EFRP thinking was also welcomed by Inverco, the Spanish funds association, but its director of research, Angel Martinez Aldama, sounded a more cautious note. "The green paper is one more step on a difficult route to a solution. The important point is taxation but that is also one of the significant obstacles stopping European pension funds," he said.

He continued: "We hope that fin-ally the European governments re-alise that complementary pensions are important for companies not in the future but in the present in order to support their efforts in paying government pensions."

With the notable exception of the insolvency margin, the UK's Na-tional Association of Pension Funds (NAPF) also welcomed the paper. Bill Birmingham, manager of benefits and services, agreed with the thinking on demographics adding that the NAPF had presented similar evidence as part of their Retirement Income Inquiry and also supported the moves on mobility al-though he questioned one anomalous proposal which potentially allows a former employee to remain in a UK scheme when he moves to an unconnected company elsewhere in Europe.

He described taxation issue as 'fundamental' while echoing the pa-per itself by expressing scepticism that any member state would hand an aspect of direct taxation to the EU.

Describing the Commission's approach as 'softly softly' Geoffrey Furlonger, partner at William Mercer in Brussels, said: "The Commission is trying to achieve its aims by a different method. Before, it did it by means of proposing legal instruments. Now it is trying to achieve the same ends by logical reasoning and powers of persuasion."

He continued: "From an Anglo-Saxon UK viewpoint it all seems very logical and sensible but what I question is whether it will be so viewed in Paris and Bonn. The UK has converted to the 'prudent man', as have Ireland and Holland but in some of the other countries it is a bit of a new concept and it will not necessarily be welcomed positively."

Furlonger was also disappointed that one argument used in the paper against the concept of a level playing field with life insurers across Europe was that pensions are a national concern. "Seven years ago they were trying to have European pension funds."

Arnauld d'Yvoire, Secretary General of Observatiore des Retraites, who represents the French PAYG schemes AGIRC and ARRCO said that while the schemes have yet to make an official response, he ex-pected the paper to be of little concern to them. However he questioned the paper's assertions about funded schemes being a solution to the problems of PAYG saying that both face demographic difficulties. John Lappin"

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