The European Commission’s (EC) proposal for a revised IORP II Directive “appears outdated,” according to the association for public sector pensions, EAPSPI.

In its position paper on the EC’s pension package, EAPSPI said the proposal introduces “a significant increase in new regulations and appears outdated”.

Specifically, the association said it fails to align with the EU Competition Compass’ fundamental ideas, aimed at strengthening the economy through the reduction of regulation and bureaucracy.

“The evident impression is that many new requirements are being introduced or existing ones expanded, without any simplification of regulations, contrary to the current trend at the EU level in many areas,” it stated.

It added that no relief is provided for IORPs and occupational pension schemes in the EC’s proposals, which it criticised for trying to incorporate all topics discussed in recent years.

This includes proposals from the European Insurance and Occupational Pensions Authority (EIOPA) in 2023 that have largely been adopted, relating to governance requirements, conduct rules, sustainability and information obligations.

New topics identified in the proposal include scaling up, limiting proportionality, allocation and performance, and benchmarking, which EAPSPI said “appear to align with the EU’s strategic realignment in 2025, such as strengthening EU competitiveness and the Savings and Investment Union.

It believes this approach results in the “imbalanced promotion of various areas of supplementary pension provision”.

EAPSPI argued that the increase in regulatory requirements and the removal of size-related proportionality criteria, intended to drive market consolidation towards larger schemes, breaches the subsidiarity principle, and “doesn’t make sense in a market economy”.

Furthermore, the association said many of the requirements only seem appropriate for third-pillar individual defined contribution (DC) products, where there are no guaranteed (lifetime) benefits, and the protection of insured individuals and beneficiaries is not ensured through collectively and parity-organised IORPs.

“For collectively organised defined benefit (DB) or DC pension schemes, the added value of many proposed regulations is questionable, as the structural consideration of employees and employers is not taken into account,” it stated.

This, it said, is in spite of collectively organised second-pillar pension provision being more efficient, in terms of decision taking, costs, participation, etc., than individual third-pillar products.

The association was more welcoming of the EC’s plans for the Pan-European Personal Pension Product (PEPP), however.

On this, it believes the proposals provide “significant relief” from existing requirements, promoting PEPP and its providers through “streamlined demands and easier implementation”.

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