The MEP steering the updated IORP Directive through the European Parliament has said there is no support for reviving solvency requirements within the legislation.
Brian Hayes, an Irish MEP in the centre-right European People’s Party (EPP), was speaking at an Economic and Monetary Affairs committee hearing on the IORP Directive.
The parliamentarian is expected to submit his report on the Directive before the summer, but in speaking to fellow MEPs, said reinstating the issue of solvency for pension schemes had no support.
Hayes also said the requirement for cross-border schemes to be fully funded would need to be “seriously looked at”, should the EU strive for more than the 86 funds created since the original IORP Directive.
Questions around solvency requirements were also raised by MEPs during the session with Hayes and industry representatives, including PensionsEurope chairman Joanne Segars, Clifford Chance pensions lawyer Hans van Meerten and aba chief executive Klaus Stiefermann.
Hayes said the Commission and parliamentarians should be “unapologetic” for using the IORP Directive to create a “gold standard” of pensions regulation across the European Union, but stressed he was in favour of leaving implementation to member states.
He said: “Rather than seeing this piece of legislation as an imposition, we really should [be] unapologetic in looking for a gold standard of protection across the board.
“If we [allow member state implementation] we will not cut across the excellent provisions currently in place, but ensure for other countries and schemes joining, that the standard is in place.”
Hayes also said he has seen broad support for the Directive across both the Union and the industry, and said the updates and consolidation of the legislation was “good house keeping”.
“Colleagues have alluded to the solvency requirements, but the fact is the issue is off the agenda and there is no support for putting it back on,” he said.
“It is crucially important there is a need for this legislation consolidation and a need to get this right.”
Responding to questions from MEPs, Hans van Meerten of Clifford Chance, said while Solvency II for pension funds was not necessary, capital requirement harmonisation was required to prevent regulatory arbitratge between member states.
He cited examples of Dutch pension funds shifting their location to Belgium in order to work under a less onerous regulatory and capital intensive system, something considered by DuPont de Nemours, Aon, ExxonMobil and Johnson & Johnson.
Van Meerten said capital requirements would be forced upon schemes in one form or another so it was better to have these universally applied through the Directive, where the industry could assist in designing them.
He also said given the wide legal view on cross-border funds, the Directive should use a ‘level of solidarity’ mechanism to determine if a scheme is truly cross-border or simply being use for regulatory arbitrage.
Hayes, who was appointed as rapporteur in January, previously said the new Directive should not “unpick” the current pensions systems in Europe and would not be rushed.