Brian Hayes, the MEP in charge of the revised IORP Directive’s passage through the European Parliament, has defended amendments that would see full funding imposed on all European pension funds.
Speaking at a meeting of the Economic and Monetary Affairs Committee (ECON) earlier this week, the IORP rapporteur argued that his proposed amendments would make the Directive a “principles-based” piece of legislation that distanced itself from the European Commission’s preferred ‘one size fits all’ approach.
Hayes, an Irish MEP, noted that he had put forward changes covering the full funding of schemes, which, under the 2003 Directive, require cross-border entities to be fully funded at all times.
Addressing the committee’s chair, Hayes said: “As we heard during our public hearing, [full funding] is one of the greatest obstacles for cross-border activity.
“In my report, I have proposed that all IORPs – cross-border and domestic – should be fully funded at the moment the IORP starts funding a new, or an additional, scheme.”
James Walsh, EU policy lead at the UK’s National Association of Pension Funds, previously warned that the amendment put forward by Hayes risked impacting companies that were consolidating individual funds after a merger.
He also questioned whether changes to a scheme’s deeds or new accrual rate would risk being seen as the launch of a new fund.
“It’s a question for lawyers, but you could make the case that it constitutes a new scheme,” he told IPE in July.
Hayes also argued that the revised IORP Directive should at no point become a “bureaucratic nightmare” for funds, and insisted it would not inflict additional costs on pension funds or members.
However, the MEP did argue in favour of greater harmonisation of pension transfer activity, an area the Commission’s initial proposal had only sought to tackle by addressing cross-border transfers, arguing the changes would make transfers “safer”.
“We should not have a lower standard in member states than that which applies at a cross-border level,” he said.
“This is ultimately in the interest of members and beneficiaries.”