GERMANY - The 'holistic balance sheet' approach for IORPs currently under consideration in Brussels would be a "danger" to occupational pensions, according to Heribert Karch, chairman at Germany's occupational pensions association (aba).

In a speech at the aba's 74th annual meeting in Stuttgart, Karch welcomed a number of changes that have been made to the European Commission's White Paper on pensions since fall last year.

But he again lamented the ongoing debate over the need for higher capital requirements for all pension funds, irrespective of legal protections already be in place.

"The Commission said there would certainly be no copying and pasting when it comes to Solvency II for pension funds, and now a holistic balance sheet approach is being discussed," he said.

According to Karch, a holistic balance sheet approach that took employer liability and insolvency protection into account would be "unnecessary" because it would increase costs without changing the status quo.

"But a holistic balance sheet approach that changes the status quo," he added, "would be a danger to occupational pensions."

He said he was worried this would be the ultimate outcome of talks on solvency for pension funds, as he "failed to see any compromise or Plan B that would save us from grave damage".

"In Europe," he added, "the future of pensions is not only calculated by actuarial means or risk measures, but also politically."

In Germany, the aba has political backing in its fight against the introduction of Solvency II or similar requirements for pension funds from labour minister Ursula von der Leyen, who also gave a speech at the event.

She acknowledged that it was "very positive" the EU was discussing the pension system, but she said there were some points that had to be looked at "very critically", such as increased capital requirements for pension funds.

"In Germany, occupational pensions are already protected - among other things, by the pension insolvency fund PSV, which has already passed a stress test when it proved itself during the financial crisis," Von der Leyen said.

She argued that stricter regulations from Brussels were therefore unnecessary for German schemes and would only serve to "ruin" occupational pensions.

"We will adamantly fight against this in Brussels, and we are on a good path of being heard," she said.

Another EU proposal the ministry and the aba oppose is the lowering of vesting periods in occupational pension schemes.

In Germany, it was been reduced to five years in 2005, but now the Commission wants to cut it further to two years.

"This is difficult because employers might then question the use of occupational pensions as a means of increasing employee loyalty," Von der Leyen said.

"At the European level, we need understanding for our special German situation, and we want to see our historically grown and modernised system being taken into consideration."

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