Chair of the European Insurance and Occupational Pensions Authority (EIOPA) Gabriel Bernadino has called on stakeholders to be open minded about the potential gains to be made from taking a Europe-wide approach to the review of the Institutions for Occupational Retirement Provision (IORP) directive.

In notes from the keynote speech to the European Pension Funds congress in Frankfurt last week, Bernadino urged the industry to look at the whole package when judging the proposed reforms.

EIOPA is currently consulting on the advice it is to provide to the European Commission on the issue, and Bernadino highlighted three key areas the authority is looking at regarding defined contribution schemes.

First, EIOPA is interested in what information should be provided to members and beneficiaries, and proposes a key information document containing a range of information about schemes.

“Where members bear the investment risk, information is vital to helping them make appropriate decisions,” Bernadino said.

Investment rules for DC schemes are also under the microscope, with the level and detail of scheme rules one of the focus areas.

Third, Bernadino identified establishing the appropriate balance between the home and the host state as an area for attention. The authority is consulting on whether the host state should retain the ability to impose certain investment rules in cross-border situations.

“I should stress at this point that EIOPA fully supports the need for protection of IORP members, all that is at issue is what should be the respective responsibilities of the home and host state in securing this,” Bernadino said.

While stressing that the authority would take a “consistent” approach to the treatment of the insurance and pensions sectors, Bernadino pointed out that a consistent approach would not mean identical treatment of the sectors.

The social and employment context of IORPs, different capital supply arrangements, and the large number of IORPs all call for different treatment between the institutions and insurers.

Finally, Bernadino said that a Europe-wide approach is relevant in light of the pressures on the sustainability of public social security systems throughout Europe.

“I believe that the development of a modern principles-based framework for private pensions safety within the EU will help to promote efficiency, deepen the single market, and better safeguard members and beneficiaries.

“I should say in conclusion that the review of the IORP directive will be a process not an abrupt outcome. EIOPA’s current consultation is an important milestone in that process,” Bernadino said.

Participants have until 2 January to provide feedback on the authority’s consultation, after which it will prepare and file its advice to the commission.

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