EUROPE – Governance and transparency measures taking shape as part of the revised IORP Directive could end up shrinking occupational pension provision in future unless they are specifically designed for the pensions sector, a group of nine industry associations from across Europe has warned.
Although plans to harmonise solvency requirements for IORPs in the EU have been put on ice, the group said such harmonisation was unjustified.
The group, which includes Pensions Europe and Business Europe, was responding to the declaration on 23 May by Michel Barnier, European commissioner for internal market and services.
Barnier said that, within the ongoing review of the IORP Directive, he had decided to put forward a proposal for pillars two and three of the legislation, covering governance, transparency and reporting requirements for occupational pension funds.
He said the implementation of pillar one – concerning solvency – was to be put on hold.
In a statement, the group said: "Governance and transparency measures designed specifically to pension funds are only justified if they provide necessary and reasonable improvements of member protection and transparency."
If copied from the Solvency II Directive, which was designed for insurance companies, these measures might be too heavy for IORPs, the group said, because of the high administrative and cost burden.
"Consequently," it said, "excessive costs will have to be borne by sponsoring undertakings and/or scheme members, which might thus lead to less occupational pension provision in the future."
The other seven members of the group are the European Association of Crafts, Small and Medium-Sized Enterprises (UEAPME), the European Private Equity and Venture Capital Association (EVCA), the European Trade Union Confederation (ETUC), the European Fund and Asset Management Association (EFAMA), the European Association of Public Sector Pension Institutions (EAPSPI), the European Centre of Employers and Enterprises providing Public Services (CEEP) and the European Association of Paritarian Institutions (AEIP).
The group said proportionality needed to be properly taken into account in the IORP II Directive, regarding existing pension rights and collective bargaining arrangements.
At the same time, it needed to maintain the right of members to be informed about their pension rights in a proper and comprehensive way, the associations said.
The group reiterated its view that plans to harmonise solvency requirements across Europe should be reconsidered, as they would have a negative impact on the existence and adequacy of workplace pensions.
"Moreover, the fundamental differences that exist between insurance companies and IORPs mean such harmonisation is not justified," it said.
The planned governance and transparency measures must reflect these differences, it added.
"They should be tailor-made and suitable for IORPs and take into account their specificities," the group said.
It said it was also important that the forthcoming directive addressed everything needed to improve the governance and transparency of occupational pensions institutions, but avoided the need to engage in time-consuming and complex level two and three implementing measures.
The own risk and solvency assessment, developed as part of the Solvency II framework, was unnecessary, it went on to say, because it was based on solvency requirements that would not be part of a legislative proposal.