"Too early" for IORP review - Verhaegen
EUROPE - Plans by the European Commission to review the IORP pensions directive next spring were "not a sign of good regulatory governance" as the full implementation was only finalised this summer, Chris Verhaegen, secretary-general of the European Federation of Retirement Provision (EFRP) has told IPE.
Verhaegen - who is one of the 10 nominees for this year's Outstanding Industry Contribution award at the IPE European Pension Fund Awards in Vienna tomorrow (Nov 15) - said a debate on an EU pension model should be started in order to define a pensions strategy which should fit into the Lisbon strategy while delivering 'affordable, sustainable and safe' pensions.
But commenting on plans by the European Commission to review the directive already in early 2008, she added: "It would not be an act of good regulation or good governance to review a Directive which has not been in operation for more than six months.
"Time is now needed - maybe another three to five years - to assess whether the IORP directive is delivering its full potential and if evidence is given that it is flawed than this should be amended. But 2008 is certainly too early for that. The challenge is to ensure there is enough time for the implemented directive to deliver and for operators to work with it," continued Verhaegen.
She added many companies and their consultants have only just started to translate the regulatory detail into manuals or road maps for practice and clients.
"Companies do not like to embark on a big project involving a lot of management and consultancy time and fees when they are not certain that it is going to be a success and that it is feasible."
Furthermore, she noted there was 'no compelling reason' for an IORP review at this point in time.
Verhaegen is convinced the problems Eastern European countries have in applying the directive to their pension systems, which are different from those in the rest of Europe, have to be solved on a higher level than the regulatory one.
"The first thing to do is to ensure that we reach the same level of market integration in new member states as we had with the EU-15 before we run ahead and do something new and introduce new legislation," she said.
As a second step, she would like to see a debate on a three-pillar EU pension model to fit in all the different systems into statutory, occupational/supplementary and individual pension provision. This model could then be used for member states to adjust and compare systems.
"Just as the World Bank has published a book on pensions, the EU should do likewise and launch the debate how you can reach safe, affordable and sustainable pensions in a European context having considered the union's objective of securing a high level of social protection. More detail is needed to work out how member states can in reciprocity and in working together at least agree on the concept of such a structure."
However, the major problem was that the European Commission and even more so the member states are "very reluctant" to discuss the pension systems as a whole on a European level, she suggests.
"Under the EU treaty social law, including statutory pensions are seen as the competencies of the member states and they therefore do not want to bring that to the European agenda," explained Verhaegen.
She stressed member states should not be forced to give up this competence but a pension debate without considering the first pillar was useless as only via statutory pensions the terms 'private' and 'supplementary' pensions could be defined.
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