A single-market regime for third-pillar pensions has moved closer with a paper entitled Towards an EU-Single Market for Personal Pensions from the European Insurance and Occupational Pensions Authority (EIOPA).
The report sets out a rationale for harmonising the sector by introducing a common regulatory framework for all existing personal private pensions (PPPs). It could be set up by establishing a so-called ‘29th’ or parallel regime structure. Under this, individuals could take up third-pillar pension plans across the EU, but national systems would continue.
The report comes as a follow-up on the European Commission’s policy white paper of February 2012. That sought ways to deal with an ageing population without adequate pensions.
Karel Lannoo, head of the Centre for European Studies, a Brussels think tank, says the 29th regime could “solve the problem of the impossibility of harmonising occupational pension systems across the European Union, due to conflicting social and labour laws”.
EIOPA’s paper emphasises that improved provision could diminish the obstacles to EU labour mobility, which is still low. Although, there are already 7.6m EU citizens economically active across EU borders, this amounts to less than 2% of the population.
Other reasons for the initiative, according to EIOPA, are a shift towards individual responsibility for securing retirement income. Stakeholders quoted in the paper also say that PPPs could become a major driver for long-term investments and promote economic growth.
One proposal, for an officially certified European retirement plan (OCERP), has already been put forward by Bernard Delbecque, director of economics and research at the European Fund and Asset Management Association (EFAMA).
EIOPA’s paper devotes many pages to the OCERP theme and discusses EFAMA’s previous EPP system, which dates back to 2007, when it was discussed by the European Financial Services Round Table.
In the EIOPA paper, the EPP concept is cited, but not fully elaborated. Adequate information disclosure would be necessary.
Although EIOPA refers to an OECD definition of a PPP as a plan that “does not have to be linked to employment relations”, it notes that a definition may be required for an EU Directive.
The likely outcome to the single market project can only be guessed. Commissioner Barnier has confirmed that any draft directive will be the work of the next Commission, which will be in place by October 2014.
Commmenting on a swing towards anti-EU sentiment in the European Parliament in the May 2014 elections, Eddy Wymeersch, an authoritative Brussels bystander, thinks that any technical financial matters would “not fascinate much the extremes in the European Parliament, left or right”. Wymeersch is a former chairman of the Belgian Banking and Insurance Commission.
As for EIOPA, the chairman, Gabriel Bernardino, has a five-year mandate that continues until early 2016.
However, the EIOPA paper does note that “most stakeholders seem to be satisfied with the present situation within the EU”, although it reflects that many people regard an single market in personal pensions in a positive light.
PensionsEurope says it is following the matter and that it supports “the development of a strong EU framework of supplementary pension savings”.