European legislation over 'prudent man' investment policies could: destroy the flexibility of pension schemes in being able to cover differing individual circumstances," according to Bill Birmingham of the UK's National Association of Pension Funds.
His remarks follow the European Commission hearing on the respons-es to its pensions green paper in Brussels last month which he attended.
All parties who replied to the paper were present at the hearing to debate the paper's central issues of 'prudent man' investment management, taxation, the mobility of workers in Eur-ope, and prudential rules for pension supervision.
A spokesperson for the commission also suggested that a final decision on the green paper, which could take the form of one or more EU directives, would be announced within two to three months.
On the issue of 'prudent man', discussion centred on whether the commission should adopt the UK backed principle of self regulating prudency for investment managers, or whether a European-backed set of investment rules were required.
Birmingham adds: "We don't feel the need for any specification in this area, as the professionals dealing with these investments on a day to day basis realise the need for prudency through balanced and diversified portfolios."
The question of taxation and the movement of workers throughout Europe prompted similar differences in opinion, with proposals being put forward for future bilateral tax agreements and others calling for a set of multilateral community rules.
However, according to Ray Martin, vice chairman of the European Federation for Retirement Provision, the complicated nature of any tax changes will require future discussion before any decisions can be reached within the timescale suggested.
He praised though the widespread agreement over the key issue that prudential rules for European pensions would not tie them into legislation on life assurance, outlining their distinction as users of investment management services and not providers: "From a pension fund perspective the meeting went well, with all our points addressed and considered. However, overall I think it will be for the courts to decide future matters of taxation, and it remains to be seen if an applicable directive can be reached."
MEP for mid Scotland and Fife, Alex Faulkner says he is equally doubtful of a final decision arriving quickly: "I don't think it will be easy to reconcile some of the differing opinions on the main issues, especially taxation and the transferability of pension rights which are bound up in the European courts. Personally, I am also concerned at the lack of ethical guidelines in the green paper, which need addressing. So I think there is still a long way to go before any unanimity is reached." Hugh Wheelan"