EUROPE - The biggest obstacle in implementing the European pensions directive efficiently could be the member state regulators, says Alan Pickering, chairman of the European Federation for Retirement Provision.

While many onlookers feel that the tax authorities may provide an obstacle to successful implementation, Pickering says it will, rather, be the regulators. Tax authorities, he argues have "seen which way the tide is flowing" and are co-operating.

Referring to regulators, Pickering said that "unless they get together and create a common framework, then pan-European pensions will be still-born".

One concern is that the directive will be translated too "prescriptively". "There is so much turmoil around, whether corporate scandals or market volatility, people could feel the need to dot the 'i's and cross the 't's, which will not be helpful to the future of pensions.”

The issue of competition among regulators could also do damage to the future of pan-European pensions. What we do not want to see, says Pickering, is one regulator saying come to our country, we're a light touch, and another saying, come to ours, we'll ensure that there is the utmost protection. This would be a "recipe for disasters."

Pickering was hopeful European pensions regulators would eventually get together. The challenge facing regulators was not easy as politicians are often too eager to blame regulators when things go wrong.

Member states now have two years to translate the European pensions directive, which became official last month, into domestic legislation. Despite the sheer length of time is has taken to put the directive together, Pickering believes now to be "the beginning."

He also touched other issues that will be relevant in the future of pan-European pension funds. With regards to public and private sector, Pickering said that the two should work together. Concerning the role of commercial providers, he criticised the insurance industry for considering the pensions market as solely "their market" and said he hoped in the future that insurers and asset managers would be regarded equally, leaving the consumer with the choice.

The role of the employer will be integral in the future of pan-European pensions and will be three-fold, he said. They will firstly have to ensure that they will provide work for older workers. This would help tackle the demographics issue - which could also be solved with higher birth rates and immigration.

Secondly, employers should continue to act as a pensions provider. Although, if politicians make it too unattractive to do so, employers could look to providing alternative benefits. Thirdly, employers should think about providing financial awareness as part of an employee benefit - counselling, guidance and training. This, he said, was not up to schools to provide.

Finally, Pickering talked of his "vision for the future". He is predicting in Europe a two-pillar system rather than the three-pillar system most commonly considered. "There will be the State system, and then a private pillar with a mix and match of collective and individual pension arrangements, with the workplace increasingly becoming the market place for both, thereby achieving economies of scale." Post-office, high-street and internet solutions would cease to exist.

In order to achieve this vision, Pickering said four cornerstones would be needed: diversity of product and region; inclusive so that rich and poor had the same opportunities; simplicity to save money and avoid barriers; and stability. In order to achieve this final cornerstone, he said that politicians would have to overcome political differences with all parties co-operating to come up with a plan. The timeframe for the electoral system is far shorter than that of the pensions system, and the future needs "all parties' support."

Pickering, who is also a partner at Watson Wyatt, was speaking at the PensMart 5th Annual European Pensions Market Forum in Frankfurt today.