11/02/2011
By Matt Ritchie
European Federation for Retirement Provision (EFRP) secretary general Chris Verhaegen has delivered an address at the Alliance of Liberals and Democrats for Europe, commending work on pensions so far while stressing ongoing industry concerns.
According to speech notes published in advance of the address, Verhaegen said relevant committees, rapporteurs and shadow-rapporteurs of the parliament had done an excellent job on a draft report on the European Commission’s Green Paper, which provided “valuable leads” for the commission.
However, Verhaegen said the “extreme time pressure” the process was conducted under had been a concern as it could indicate a return to “old and wrongful” habits of rushed legislative action, and “it also worries us because it could indicate that the holistic approach might peter out.”
In addition to putting a spotlight on the speed of the process, Verhaegen stressed the concern expressed by many of the more than 1,600 respondents to the Green Paper around applying concepts “borrowed from insurance legislation” to pensions.
The Green Paper asked what an equivalent to the ‘Solvency II’ regime for insurance undertakings would look like if applied to pension schemes. The Solvency II directive puts in place a three-pillar, risk-based solvency regime.
“Relying solely on capital requirements as a risk-absorption mechanism for pension institutions seems inadequate to EFRP. Such an approach will hamper economic growth by pumping capital out of the market to store it unproductively without significantly improving beneficiaries’ protection or security over the long term,” Verhaegen said.
In addition, the secretary general highlighted mobility and transferability of pensions, saying the complexities of the matter have been underestimated by many people, experts included.
On pension transfers, Verhaegen recommended development of a European matrix which both employers and employees could use to clearly identify where they could transfer their pension capital.
“Discriminatory” tax barriers for pension transfers could also be removed, she said.
In closing, Verhaegen said 60% of the European workforce does not benefit from an occupational scheme, and efforts should facilitate, not stifle, schemes’ development.
“Honourable members of Parliament, the Green Paper has identified the right issues and challenges. It is now time to give the holistic process started by the green paper time to unfold.”
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