According to Vincent Vandier, executive director of AFPEN, the French pension fund association, the Thomas law, which could have been a start for pension funds, suffers some basic defects, that could be taken account if and when a new law is passed in parliament. Certain benefits as well as accumulated savings could be paid to dependants in the event of a death before retirement. The scope for transfer of funds should be widened and unions should be accommodated and their role strengthened.
Defined benefits as well as reimbursement of accumulated savings in the event of death or of incapacity should be allowed and transferability should mean both the tax-free transfer from other sources of long-term savings and early availability of funds in case of hardship".
Plans should allow a more proactive trade union involvement. Collective bargaining should be the name of the game. Negotiations should, as a possibility but not as an obligation, include employee unions in the setting up and management of the plan. The employer in the setting up of a pension fund could be compelled in a first round of negotiations to consult trade union employees representatives.
A softening of the prudential guidelines with a solvency margin on top of a minimal funding requirement is desirable, but only where the pension fund is the risk bearer.
Tax and social charge reliefs have to be retained, according to AFPEN, although the association accepts that most employers' contributions will be subject to social charges.
In respect of corporate governance a code of good conduct and a quality standard should be adopted.
The code, to be agreed by AFPEN's members, will be based on three principles: security of the promise, transparency of the management and adequate information with a responsible dedicated entity to supervise and to promote scheme members' interests.
A standard known as Pension Quality Europe F19 and P19, the former for the fund, the latter for the plan, should be granted every three years by an independent body, in line with ISO 9000 guidelines, and requiring the plan and the fund to meet five commitments each.
For the fund the requirements are that the dedicated entry is stable, that the executive is reliable, that the operators are professionals, that the solvency is adequate and that steering is effective.
For the plan, the requirements are that the promise is clear, that the investment strategy is adequate, that the supervisory committee has effective control, that the marketing is transparent and that the communication is effective.
AFPEN should be in a position to provide statistical data, to pool statistics and have some standards in common across Europe. Considering the long-term nature of pension funds they deserve a European directive different from that for life insurance. John Lappin"