Jeremy Woolfe: The 'slow burn' of the IORP II Directive
In Brussels-speak, the word ‘probably’ could mean ‘not for a very long time’, warns Jeremy Woolfe
The clearance of the draft IORP II Directive through the European Parliament’s key Economic and Monetary Control Committee (ECON) committee, due in the first week of December, has now been delayed.
The new set date is “probably” 25 January 2016, a parliamentary official informs IPE, but with the word “probably” emphasised.
Explanation for the existing and possible further hold-up is that major political parties have yet to agree on major “compromises” (amendments), meaning there remain major different opinions.
These include the serious issues of cross-border matters, funding rules and transparency.
As a result, the word “probably” could be translated, in Brussels-speak, as “not for a very long time”! This would obviously upset reformists.
Overall, the status quo today appears not much removed from that in, say, October 2013, when Matti Leppälä, secretary general at PensionsEurope, gave a general thumbs-up for the new rules while calling for something not too “burdensome”.
At the same time, other archives show that the European Insurance and Occupational Pensions Authority’s relevant stakeholder group (OPSG) suggested the need for a serious upgrade to the IORP I of 2003.
The group noted that many of Europe’s estimated 140,000, mostly small pension schemes were less efficient than if the individual retirement savers had invested alone.
The European Commission itself is, at present, keeping largely mum: “We don’t have much to say at this stage.”
But Better Finance recently wrote a bitter letter addressed to Brian Hayes MEP, the centre-right ECON committee coordinator. Guillaume Prache, head of the consumer interest group, noted that the “proposed amendments in the ECON draft report would mean a very significant step back in the protection of EU pension savers”.
It argued against a watering down of the information IORP participants would receive through the so-called Pension Benefit Statement (PBS). The letter then went on to complain about ECON proposals to delete Commission requirement for disclosure of funding levels to participants. The body went on to comment that the amendments to IORP II were clearly in direct contradiction to the Capital Markets Union Action Plan.
Historical background is that the new rules for occupational pensions, as proposed by the Commission in April 2014, passed first to the Council of the EU, representing national governments, before going on to the Parliament. This order is contrary to normal practice.
In December 2014, the Council gave crucial support for the removal of remaining prudential barriers for cross-border IORPs, while advocating provisions for clear and relevant information to members and beneficiaries. In addition, the member states’ position was, and most likely still is, to recommend good governance and risk management, and ensure that supervisors have the necessary tools to supervise IORPs effectively.
One has to ask why MEPs, who supposedly also reflect the views of their national interests, should now have suggested a mammoth number of 700 amendments during the later committee processing stage?
As for next steps, the Dutch six-month presidency, starting in January 2016, is considered unlikely to tolerate matters dragging on after any vote in the European Parliament. However, it will also face the need for the whole re-worked shooting bag to have to go back to “trilogue”, which would involve the Commission, the Council and Parliament having to get together in three-way meetings to agree finalisation. Only an optimist would see this lasting just another 2-3 months.
As stated by Erik Hormes, from the office of Paul Tang, centre-left MEP shadow coordinator for IORPS II in the ECON committee, he has never seen a Directive on “such a slow burn”.
That’s certainly one way of putting it.