EUROPE - Brussels could be acting outside its remit and intruding on the social contract by weighing in on the issue of pension promises and collective bargaining, according to EFRP secretary general Matti Leppälä, speaking in the September issue of IPE magazine.
In the interview, Leppälä suggested the European Commission could be overstepping the mark by trying to impose its interpretation of 'regulatory certainty' on promises that arise from collective bargaining.
He argued that the valuation of pension promises using a 99.5% level of confidence based on a value-at-risk framework should remain with the social partners.
But he also warned that the framework currently on the table could instead mean the Commission is looking to oversee those agreements.
In its consultation paper, the European Insurance and Occupational Pensions Authority (EIOPA) stipulates that occupational pensions taking part in the 'holistic balance sheet' quantitative impact study will need to calculate their solvency capital requirements, which set out the risks that should be considered by IORPs.
The authority also points out that the stresses and correlations relating to the risks are based on the most recent estimates for Solvency II, which uses a confidence level of 99.5%.
But Leppälä argued that the EFRP's members believed the pension promise could change - "not in all countries in the same way, but, in many countries, they are the result of collective bargaining or agreement between social partners and can be adapted".
He insisted that such agreements did not fall within the Commission's scope.
"If the social partners consider workplace pensions to be part of salary, it should be for them to agree if they wish to have a more flexible promise," he told IPE.
He also argued that the consultation process on the quantitative impact study for the revised IORP Directive should have been better prepared.
But he did acknowledge that it had been difficult for EIOPA to work on the IORP regulatory framework due to the tight deadline imposed by the Commission.
He also conceded that the authority had been given a very challenging task in having to come up with a totally different framework for occupational pensions, when the framework was essentially based on Basel III and Solvency II.
For more on Matti Leppälä's interview with IPE, please see the September issue of the magazine.