The planned changes for a revised IORP directive should be abandoned since the European Commission has failed to make its case, claimed the National Association for Pension Funds (NAPF).
The Institutions for Occupational Retirement Provisions (IORP) directive starting off from Solvency II rules was a mistake, argued the occupational pensions lobby group, adding the IORP directive will severely damage UK’s defined benefit provisions.
NAPF made the observation at the European Insurance and Occupational Pensions Authority’s (EIOPA) consultation on IORP directive that closed yesterday.
James Walsh, senior policy adviser at NAPF also criticised EIOPA’s draft recommendation that mandates professional qualifications for trustees.
“We do not think there is a need for a new IORP directive and we do not think the European Commission has made a case for it. EIOPA should be saying that in the advice,” Walsh said.
The move to overhaul the IORP was attributed to lack of growth in cross-border pension businesses.
“The EU does not have a policy competence over pensions – it has one over the internal market. Their argument rests entirely on the position that the internal pensions market is not working well because we only have modest numbers of cross-boarder pension schemes,” Walsh argued.
“Therefore they need to have a bigger and better IORP directive to better promote cross-boarder schemes. We simply do not go along with that analysis,” he added.
Though EIOPA’s data shows that cross-border schemes have grown modestly, NAPF does not believe IORP was the biggest deterrent.
“We think it is far more likely the reason there aren’t many cross-boarder schemes is that people do not want schemes to operate them. There is not that demand. There are other more significant obstacles – such as the different tax systems in different countries. Those are really the things that stand in the way,” he argued.
The NAPF is also working with the European Federation of Retirement Provision, the European umbrella organisation for pension funds, to oppose the changes.