Out-Law News | 10 Mar 2014 | 2:54 pm | 1 min. read
At the National Association of Pension Funds’ (NAPF’s) conference in Edinburgh, 64% of attendees of a session on regulatory risks said that the proposal, abandoned by the European Commission last year, remained their top worry. Financial News, which reported on the session, said that the ongoing implementation of the European Markets Infrastructure Regulation (EMIR) was the second biggest worry, voted for by 28% of session attendees.
The Commission had previously proposed the introduction of more stringent solvency requirements for pension providers as part of its reform of the Institutions for Occupational Retirement Provision (IORP) Directive. That new system should, it had said, be compatible with the solvency requirements due to come into force for insurers from 2016 under the Solvency II regime “to the extent necessary and possible”.
However, EU Internal Market and Services Commissioner Michel Barnier announced that the proposal was to be abandoned in May 2013. Instead, the new directive would focus on improving the governance and transparency of occupational pension funds until “further technical information” could be obtained. However, he said that the proposals were not being abandoned entirely.
According to the NAPF’s James Walsh, who leads on EU and international regulation for the industry body, European regulator the European Insurance and Occupational Pensions Authority (EIOPA) now plans to consult this year on new funding standards for pension schemes.
“The political landscape can always change, and the European Commission is always comfortable playing the long game,” he told Financial News. “The alliance of countries that was built against this proposal may not be in place in three, four, five years’ time. If [the proposal] did return, it would not be the first time we have seen a controversial proposal defeated once, and then brought back later.”
The Commission had previously said that new solvency rules were necessary to ensure a “level playing field” between insurance companies, which sell pensions in various EU member states, as well as to protect the pension savings of cross-border workers. However, certain member states including the UK already have strict protections in place for occupational pensions. In the UK, the Pension Protection Fund (PPF) pays out to members of participating defined benefit (DB) schemes in the event of an employer’s insolvency.
According to Financial News the UK and Dutch governments had been most strongly opposed to the Commission’s original proposals. Ireland, Belgium and Germany had joined them in blocking the plans.