A Green Paper focusing on adequate, sustainable and safe European pension systems, published by the European Commission, has been welcomed for smoothing the way for pan-European provision.

Global professional services company Towers Watson said the Paper holds significant promise of furthering the development of cross-border pension schemes, and has also been given the thumbs up by the European Federation for Retirement Provision (EFRP) for its “holistic approach”.

Chairman of the EFRP, Angel Martinez-Aldama, said: “The Commission’s holistic approach consulting on the entire pension systems of the Member States is to be welcomed and deserves full support. We note that some ideas promoted by EFRP have found their way into the Green Paper. Our Federation will conduct an intensive dialogue with its Member Associations to provide the Commission with a position that reflects the opinions of Europe’s pension institutions and their members.”

If the Pensions Directive is amended as implied by the EC Green Paper, Towers Watson said cross-border plans could develop further and become a mainstream feature of the European pension landscape.

Jane Beverley, principal and head of research at Punter Southall, added: “We are pleased to see that the paper contains a broad discussion of the issues facing pensions provision across the EU, and we welcome the EU’s acknowledgement that there is no ‘one-size-fits-all’ pension scheme design. There are also reassuring words about the need for ‘ensuring regulation is proportionate and does not push employers into insolvency or into abandoning pension schemes’.”

However, the consultant said it is concerned that the Paper sends out mixed messages in the context of solvency. “In particular, the Commission sees Solvency II as potentially a ‘good starting point’ for developing a pensions solvency regime. The paper asks simply what an equivalent solvency regime for pension funds would look like, and does not ask the question which surely should come first – whether a solvency regime is required at all for pensions.”

Beverley said Punter Southall has previously expressed concerns about the adoption of a Solvency II style regime for pensions in the EU, since pensions and insurance are “fundamentally different”.

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