20/04/2012
By Ilonka Oudenampsen
The Dutch Pension Federation has welcomed the European Commission’s White Paper on Pensions and said it is pleased to see that it takes a holistic approach to pensions.
The White Paper was published on 17 February and contains 20 policy initiatives for improving pension adequacy, security and sustainability.
The Federation agreed that multi-pillar systems, collectivity, economies of scale and risk sharing are important, but it also expressed concern about the IORP Directive.
In its response the Federation said: “Regarding the review of the IORP directive, we are encouraged by the recent statements of the European Commission that Solvency II will not be applied to IORPs on a one-for-one basis. However, we remain concerned about the impact of the revision of the quantitative requirements in the directive and the impact of cross-border activities on our mandatory system.”
As positive points of the White Paper, it pointed out the adjustment of the labour market and pensions to demographic trends, the focus on improving second and third pillar pension savings, and the development of a European pension tracking service to facilitate labour mobility.
As points of concern, the Federation said that a survey of existing best practices for occupational schemes will do a better job of capturing the diverse pension landscape in Europe than working on a code of good practice. “A survey of existing best practices could provide for guiding principles for the successful implementation of a funded occupational pillar, without laying down a code that may prove inappropriate for some Member States.”
On the review of the IORP Directive, it said it puts a lot of emphasis on the corss-border activities of IORPs. “We doubt whether this should be a goal in itself. Advantages of scale and cost-effectiveness can be achieved without cross-border activities but rather by means of the way pension provision is organized. For example, about 70% of all Dutch employees participate in 50 mandatory sector wide funds. This keeps the per capita costs low and creates a high degree of economies of scale and efficiency.
“Efficiency and economies of scale are created through mandatory participation. In addition, mandatory participation creates solidarity and provides for risk sharing mechanisms that enable buffering financial shocks. Because of this mandatory participation, Dutch pension funds are excluded from cross-border activities. They are only allowed to operate at a national level due to national sector wide agreements,” the Federation explained.
