Eiopa looks at pension effects of EU-wide schemes

In a 516-page document, Eiopa’s Advice to the European Commission on the Review of the Institutions for Occupational Retirement Provision Directive, the chairman of Eiopa said millions of people relied on company pension schemes and so any proposed changes would need to be thought through carefully.

The document highlighted changes proposed earlier this year by Eiopa, such as introducing a holistic balance sheet for a “Europe-wide supervisory regime for the Iorps directive”.

This balance sheet would take into account indexation, accrued rights, sponsor support and pension protection funds and help when comparing EU-wide schemes. The Eiopa advice document said: “The approach is to acknowledge the existing diversity of occupational pension systems in the EU member states, while capturing all these systems into a single balance sheet.”

The document also suggested introducing a key information document for all defined contribution schemes to allow members to compare schemes anywhere in the EU.

Gabriel Bernardino, chairman of Eiopa, said: “Sixty million people rely on DC schemes and I have no doubt this number will grow in the coming decades. However, this is not the end of the process of developing a European framework for occupational pensions, but merely the beginning. In particular, we have to ascertain for ourselves, through the quantitative impact study, that the proposed approach stimulates affordable yet secure occupational pension provision in Europe.”

However, the National Association of Pension Funds warned a Solvency II-type scheme would add more red tape on pension schemes.

Joanne Segars, chief executive of the NAPF, said: “Solvency II would pile extra pressure on firms that are struggling to survive during these difficult times.

“The NAPF’s initial assessment shows that these rules could cost UK pension funds at least an extra £300bn. Faced with extra funding demands, many companies would have no choice other than to close their final salary pension schemes.”

The Investment Management Association also questioned the use of Solvency II in the pension space. Jonathan Lipkin, head of research and pensions for the IMA, claimed a one-size-fits-all approach may harm national pension systems.

He said: “Occupational pension schemes and insurance companies are different in nature.”

The Eiopa document coincided with the publication of a 40-page White Paper, An Agenda for Adequate, Safe and Sustainable Pensions, from the European Commission.

The EC said it would support labour market reforms on retirement and create a best practice approach to promote incentives for pension saving.

Duncan Glassey, partner for Edinburgh-based Wealthflow, said: “There has to be a level playing field between all schemes. However, it is getting the actuaries to do the same thing across Europe that could be an issue.”