The countdown has started. By the end of May, 751 members of the European Parliament will have been selected by as many of the 400m electors who care enough to vote.
For the EU, 2014 is a pivotal year. The Parliament will have seen a massive churn of new MEPs arriving in June to take office. It will have to make do without such stalwarts as Sharon Bowles, chair of the Economic and Monetary Affairs Committee, and Ria Oomen-Ruijten, champion of mobile workers. Neither will be standing for re-election.
By September, a Commission president will also have been chosen, and a new set of commissioners will then be elected. In fact, half of the current commissioners and an even higher proportion of senior officials will have moved on, believes Karel Lannoo, head of the Centre for European Policy Studies.
Crucially, the commissioner for the single market Michel Barnier will be replaced by a successor who will inherit the IORP II dossier. The new commissioner must evaluate what should be done on the issue of solvency rules for pensions, working with the European Insurance and Occupational Pensions
Authority, whose head, Gabriel Bernardino, will stay in position.
By end-2014, a new president of the Council, the forum for national government representatives, will also take office. The present incumbent, Herman Van Rompuy, has concentrated on achieving consensus among 28 diverse positions. Will his successor continue on the same track?
Whatever eventuality, there will be ripple effects throughout the institutions. One Commission official says Germany is pushing for a reduction in the number of commissioners from the current 28 to as few as half that number.
Following a vacuum in financial legislation under the previous Commission, the past five years have seen 40 different proposals, some still in negotiation. The next priority will be implementation in the member states. But a general lack of clarity has left financial trade associations, including those representing the occupational pensions sector, on tenterhooks.
A key focus will be on the IORP II package, according to Matti Leppälä, secretary general of PensionsEurope. But he says there are another 20-30 legislative dossiers, mainly financial markets legislation involving thousands of pages, that must be kept under review.
This is not made any easier because the relevant legislation tends to lump pensions along with banking and insurance. Exemptions from key proposals should be sought due to the social function of occupational funds and because they are not a commercial interest, says Leppälä. One example is the financial transaction tax, where PensionsEurope is pushing for an exception on the grounds of cost.
A further burden could arise from a proposed imposition of a tax on derivatives. This matter was still under discussion at the time of writing.
Another black cloud threatening occupational pensions is potential future solvency rules, even though the current IORP II proposals do not cover this. The future direction depends on the identity and thinking of the new single-market commissioner.
Leppälä would like to see a paradigm shift from the present mark-to-market philosophy to an approach in line with the long duration of pension investments, and Solvency II-like capital requirements for pensions clearly worry him. The fear is pension funds would eventually shift out of assets considered risky, such as equities.
As for legislation to cover packaged retail investment products, PensionsEurope is against the introduction of a key information document for pension funds. “We need different rules – in our case rules appropriate for use by social partners, not rules designed for consumer protection,” Leppälä says. “A copy-and-paste system would not really fit for occupational pensions.”
In Parliament, strong support for the euro-sceptic parties is expected in May’s elections. Speculation in Brussels is that this could force the centre-right and centre-left groupings – the European People and the Socialists and Democrats – to co-operate more closely.
Some believe they might even agree to a cohesive plan to cover the five-year life of the Parliament. So far, all we can say for certain is that nothing is certain.