IORP review will include solvency - McCreevy
EUROPE - A review of the IORP directive starting next year will consider a solvency system for pension arrangements, Charlie McCreevy, EU commissioner for Internal Market and Services, told a conference on Friday.
Speaking at a a conference organised by the European Association of Paritarian Institutions of Social Protection (AEIP) in Dublin, McCreevy said the IORP would investigate whether defined benefit pension schemes in particular should be required to hold certain levels of funding to meet their pensions promises.
"We need to consider whether [Institutions for Occupational Retirement Provisions] IORPs ought to be subject to a similar regime as insurance undertakings in instances where they assume similar risk, or where they guarantee a certain investment performance or a given level of retirement benefits, such as under defined benefit schemes," McCreevy said.
The commissioner explained CEIOPS' Occupational Pensions committee has been commissioned to "start a fact-finding exercise on Member States' current solvency regimes", the outcome of which will be a starting point for the review of the IORP directive beginning in 2008.
"Currently, the minimum harmonisation provided by the IORP Directive gives Member States considerable leeway to calculate the amount of own capital they require IORPs to hold for such risks, in contrast to the full harmonisation intended under Solvency II," said McCreevy.
However, he promised the "special nature" of pension schemes will be taken into account in any considerations of solvency provision.
"We will tread carefully and operate in a tradition of social dialogue and partnership," he continued.
In discussing the European Union construction sector and its role as the frontrunner for pan-European projects, McCreevy also touched on the issue of pensions portability and stated the commission will draft a new portability directive once Parliament has discussed the current compromise paper in its mid-June session.
At a recent summit of the Council of Ministers, the Dutch delegation rejected the current proposal so even if the European Parliament voted in favour of it, no decision on the directive can be made at the moment as it also has to be passed by the Council of Ministers.
That said, McCreevy complimented the AEIP on their work in facilitating cross-border pension provision in the construction sector.
"Since finding an agreement at EU level on a [portability] legislative text is proving to be quite difficult, I can only welcome private sector initiatives which aim at adapting pension systems to the Single Market," he added.