A German pension association has criticised the restrictive “corset” of regulation proposed by the European Commission’s revised IORP Directive, noting that the vague risk evaluation measures could still lead to the introduction of rules akin to Solvency II.

VFPK, the association representing the interests of company schemes, said that the proposed changes did nothing to increase the attractiveness of occupational provision (bAV) in Germany and would result in increased costs with little discernable benefit.

Helmut Aden, chairman of the association, acknowledged that the Commission was attempting to increase the stability of pension systems across Europe. “What is now being proposed in the Directive is, in many areas, more expensive, provides little additional benefit and is trying to impose a standardised European corset on areas that are regulated differently in each member state.”

According to the association, the proposed Directive further underlines Commission’s lack of understanding of bAVs.

Aden said that the draft proposal and the recent debate around the inclusion of the occupational sector in the packaged retail investment products (PRIPS) regulation that would have made it mandatory to publish Key Information Documents (KIDs) showed the Commission wished to treat bAVs no different from individual life insurance contracts or other financial products.

He emphasised that the involvement of sponsors and employees in investment decisions underlined this difference.

“They are not in competition [with insurers] and are already strictly regulated on a national level by the BaFin,” he added.

Aden was also critical of the “vague” proposals for risk evaluation measures for pension funds, which would require all schemes to conduct regular reviews of investment strategy and other factors when there was a material change in funding.

“There is a real danger that Solvency II could be introduced through the back door,” he said, echoing concerns previously raised by numerous people in the industry.

The chairman said that if what was proposed in the IORP Directive resulted in decisions on risk evaluation being left with national regulators, then a “practical and sensible solution” could still be found for all involved.

VFPK also joined the Dutch and Finnish industry in criticising proposals for a universal pension statement as leading to an increase in bureaucracy that would scare off both employees and employers.