EUROPE – Piia-Noora Kauppi, Finnish MEP and member of the European Parliament’s Economic and Monetary Affairs Committee, has called for the complete abolition of any quantitative investment rules for pension funds under the forthcoming European directive, arguing that they could damage the future of a single European pensions market.

In a speech at the European Pensions conference in London today (March 29), organised by the European Federation for Retirement provision and the Royal Institute of International Affairs, Kauppi hit out at the retention of any proscriptive investment rules: “Quantitative restrictions are arbitrary and counter-productive and they could be used as protectionist measures for member states, so harming the single European pensions market.”

Referring to last week’s announcement by European Parliament rapporteur on the occupational pensions directive, Othmar Karas, that a ten year transition period “subject to certain restrictions” be brought in for pension funds to take the qualitative route, Kauppi noted that this had created some confusion.

While arguing that the deadline was an improvement on the Commission’s open-ended position, Kauppi noted that Karas’ suggestion still left a grey area for quantitative impositions by member states.
“ This deadline would of course abolish the investment restrictions given according to article 18(7), but would this mean that the possibility for member states to require quantitative restrictions within the scope of the article 18(6) could remain forever.”

Article 18(6) of the Commission’s draft directive stipulates that while members states shall require institutions for occupational retirement provision (IORP) to invest in a prudent manner, they may also lay down “more detailed rules” to reflect the range of schemes operated by these institutions.

Kauppi summed up: “My personal view is that we should either abolish all the possibilities for member states to give quantitative restrictions from the directive or we should at least introduce a deadline for them all.”