(August 28, 2011) — Simplification is needed on cross-border pensions, Aon Hewitt believes, noting that the European Commission (EC) should consider a pan-European pensions regime instead of individual national guidelines.
In its response to a consultation by the European Insurance and Occupational Pensions Authority on the review of the EU Directive on the Institutions for Occupational Retirement Provision (IORPs), Leonardo Sforza, head of Research and EU Affairs at Aon Hewitt, said in a statement: “It is only through the deployment of a more business-friendly regulatory environment for occupational pensions, that employers, employees, IORPs and financial service providers will reap the full benefit of the EU Single Market. The affordability of current and future pension arrangements for employers is a crucial issue to be considered by policy makers and supervisory authorities at both the national and European levels.”
He continued: “Any new measure should not undermine the cost-effectiveness of occupational retirement provision in the European Economic Area. In this context, the EU intervention on the IORP directive needs to be more like physiotherapy – an enabler of activity – rather than like a surgical intervention which becomes invasive and, even with good intentions, runs the risk of compromising the vital organs of the many different ‘pension’ bodies.”
The European Federation for Retirement Provision had additionally argued against the use of Solvency II as a basis for the new IORP directive.
Concern over EU pension legislation is nothing new. Last year, the UK’s National Association of Pension Funds (NAPF) cautioned that new EU rules on pension funding could increase the rate at which companies are closing their definite benefit schemes.
The NAPF, which has shared its concerns with the Confederation of British Industry (CBI), Trades Union Congress (TUC), Institute of Chartered Accountants in England and Wales (ICAEW), and Institute of Chartered Accountants of Scotland (ICAS), noted that it’s essential that the EU acknowledge the rich diversity of pension provision across member states when thinking about how to meet its core objectives of member states providing a strong, adequate and sustainable pension system.
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