Pension restrictions may be seen as trade barriers
EUROPE – Finnish MEP Piia-Noora Kauppi has called for the removal of a controversial clause in the forthcoming European directive on occupational pension funds, which would allow Member States to impose domestic restrictions on cross-border pension arrangements - claiming that acceptance of the clause could effectively mean a reintroduction of European trade barriers.
In a proposed amendment to the report of Austrian MEP and parliament rapporteur on the directive, Othmar Karas, Kauppi says article 15.5 of the draft directive, which allows member states to make the calculation of technical provisions “subject to additional and more detailed requirements”, should be deleted.
Kauppi’s justification for the deletion centres around the aim of the directive, which she notes is to introduce a common ‘prudential framework’ valid throughout the EU.
This she says would allow institutions complying with home state requirements to operate across border with no further formal requirements.
She adds: “ The current clause contradicts the idea of a common prudential framework. Furthermore, unless it is deleted, the clause as formulated implies that additional and more detailed requirements may also be imposed on institutions located in another Member State. This will effectively mean a reintroduction of trade barriers.”
A number of other proposed amendments to the Karas report also question the possible imposition of quantitative investment rules on pension funds.
UK MEP Christopher Huhne, a member of the European liberal, democrat and reform party has tabled an amendment that would give member states just two years to abandon proscriptive investment rules in favour of the prudent person principle.
In his justification, Huhne states: “ By definition, averages (such as the 70-30 rules proposed here) will be inappropriate for funds that are not average. There is evidence to show that investment according to the prudent person rule provides better returns at no cost to security. No evidence has been provided to the contrary.
“ A transition period is proposed to allow the relevant national authorities and funds to gain the necessary expertise to implement the prudent person rule.”
The suggested amendments to the draft directive will be considered by the Economic and Monetary Affairs Committee (EMAC) of the Parliament on Monday May 28.