EUROPE - A minister of the European Parliament has backed fresh calls for the creation of a pensions pillar ‘model' which could help to support the development of Europe-wide pensions legislation.

Speaking in Brussels earlier this week, Ieke van den Burg, an MEP and member of the steering committee of the European Parliamentary Pension Forum, told delegates of the European Fund and Asset Management Association (EFAMA) conference on defined contribution schemes, said she believed it was necessary to create a general model for pensions funding which recognised the role of State pensions in retirement but made it clear where ‘second pillar' finished and ‘third' pillar schemes started.

"I am also very much in favour of the [pension] pillar structure and for ensuring it meets the issue of guarantees. The minimum we could provide is the State system as first pillar. This would prevent people from getting into poverty," said van den Burg.

"There should be a second pillar as having only the third [voluntary] pillar is not enough, it is seen in the new member states and collectives as for the few who have made money and can afford to out savings into retirement. For the mass of people, it is not a realistic option."

She continued: "And I don't believe we should say we cannot have commercial elements within the second pillar. It is high time it was transparent."

Van den Burg's comments followed a fresh plea from Chris Verhaegan, secretary general of the European Federation of Retirement Provision (EFRP), at the EFAMA meeting for the establishment of a model which could then be recognised in any discussions about European pensions regimes.

"We still think the policy should be for a three pillar system. If you don't have the difference between the pillars it will become impossible to have agreement between the member states [on pensions]. We are advocating for a model of the second and third pillars and that is the modelling the industry would then deliver," said Verhaegen.

As it stands, there is no clear model for the definition of ‘second' and ‘third' pillar pension regimes, and the widening variations of schemes across Europe now means not all nations have clearly defined ‘second and ‘third' pillars.

Indeed, a report produced for EFAMA on defined contribution schemes noted while some pension systems in Europe are considered to be part of the second pillar because they are occupational or employer-related, they are not formally classified as second pillar schemes.

Stakeholder pensions in the UK are listed by the Government Actuary's Department, said the Oxera-produced study, as third pillar personal schemes even though they are "linked to employment and clearly considered by employers and employees as trust-based occupational schemes" while Poland has a regime which splits some of its social security provision as 2nd tier first pillar because it is statutory funded private schemes and mandatory contributions, even though plans are again occupational in arrangement.

In certain markets, such as Italy, the division between second and third pillar pensions is also very fine and often not clear, while elsewhere, such as the Netherlands, the division could be seen as shutting out commercial propositions from the second pillar who claim they then do not operate on a level-playing field.

The EFRP has spent a substantial amount of time arguing for the creation of a three pillar ‘model' which in simple terms splits state regimes as first pillar, and distinguishes between mandatory and voluntary arrangements linked to employment under the second pillar.

Speaking to IPE today, Verhaegen recognised obtaining an actual definition of the three pillars would be "ambitious" but establishing certain rules or standards they might be recognised under would be a significant step.

"We can set the criteria which says if [the scheme] perhaps corresponds to 80% of the criteria, it should be considered second or third pillar. That would be the way to proceed but first we to agree on a model. It would not be possible without some kind of [EC]instrument such as a document or communication which could explain the common denominators," said Verhaegen.

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