The European Commission has postponed its plans to include solvency requirements in an updated pensions directive, which will be presented this autumn.
In light of the preliminary results of the quantitative impact study (QIS) published by the European Insurance and Occupational Pensions Authority (EIOPA), the Commission said that it is "necessary" to get more technical information so that it can "deepen" its knowledge on the solvency issue before it makes any further decisions.
The revised Institutions for Occupational Retirement Provision (IORP) directive will focus on improving the governance, transparency of occupational pension funds, and will be presented this autumn, while the solvency requirement will remain an "open issue" for the time being.
European Union internal market and services commissioner Michel Barnier said: "The situation should be re-examined once we have more complete data. I emphasise that with regard to solvency rules, we must not lose sight of the need to guarantee in the longer term a level playing field between different providers of occupational pensions."
The decision was made in light of the differing situations in members states, and even though no decision on solvency will be made, Barnier said that "urgent" action was needed to improve governance and transparency.
Barnier added: "As I have often said, my priority is to protect future pensioners. We must face up to the weaknesses in some occupational pension funds.
"However, I have no desire to penalise national systems which work well. And I especially do not want, in the current fragile economic situation, to harm the ability of pension funds to play their role as long-term investors."
It is not certain when the solvency-rules will be postponed till, but Barnier expects that the quantitative rules will be a task for his successor.
PensionsEurope secretary-general and CEO Matti Leppala: "Commissioner Barnier has made the right decision as it is vital to take more time for a thorough analysis of the effects of possible changes in solvency rules, which differ greatly between member states.
"The European pension funds and other IORPs have to be able to
contribute to the growth of European economy and employment and the solvency rules have to enable this.
"The changes in pension landscape, and especially the shift from defined benefit to defined contribution schemes, poses many new challenges in pension fund governance and disclosure of information to scheme members and beneficiaries."
Joanne Segars, PensionsEurope chair, said that the organisation will work closely with the European Commission to find good rule on governance and disclosure.
PTL managing director Richard Butler said: "We welcome this change of heart by the European Commission. If they had followed through on their proposal that pension schemes should hold a significant amount of surplus capital to cover contingencies it would have not only had a devastating impact on remaining DB pension schemes and the employers that sponsor them, but also had a detrimental impact on DC schemes.
"While today's news is excellent, we need to remain vigilant that the new Commission, which will take office late next year, doesn't try it on again".
First published 23.05.2013
monique_simpson@wilmington.co.uk
