In its response to the European Commission’s (EC) Green Paper on pensions, Aon Hewitt has made an appeal for an avoidance of new EU regulation and more effective implementation of legislation that already exists. Overall, Aon Hewitt has welcomed the consultation exercise, launched this summer, believing it to be the most comprehensive review made by the EC of pensions for over a decade.
Leonardo Sforza, head of EU Affairs and Research at Aon Hewitt, said:
“There has been great merit in this exercise by the EC; it has put at the centre of the debate the ultimate goal of pensions – improving the financial security of people in retirement. However, the Green Paper did seem to under-estimate the key issue of affordability of current and future pension arrangements for employers. The introduction now of new statutory requirements is more likely to increase the cost for employers rather than expanding the availability of occupational pension arrangements for employees. The regulatory frameworks in place should support rather than discourage pension arrangements.”
“We believe that a more business-friendly regulatory environment for pensions is vital for all concerned as well as for the competitiveness of the European system. With that in mind, we believe that the temptation to introduce new regulation or new burdensome requirements should be resisted. Instead, the EU should focus on ensuring that EU legislation already in place – notably the EU pension fund directive – is implemented more effectively while making rules more transparent and predictable.”
Leonardo Sforza continued:
“The EU can also play a key role by supporting member states’ activities for improving financial education and ease of access to relevant information – both for individuals and businesses. These are the kind of baseline activities which can bring EU institutions closer to citizens’ needs and add value to country specific work on the ground.”
Pan-European pension arrangements
On future policy direction, Aon Hewitt believes the priorities lie with tackling the as yet unfulfilled business expectations of simplifying cross-border pension arrangements.
Leonardo Sforza said:
“There are still gaps which undermine the effectiveness and credibility of a European Single Market for pensions. A thorough “due diligence” of all national operating measures implementing the ‘IORP’ Directive is critical, notably in view of the forthcoming Single Market Act. In parallel, the feasibility needs to be assessed of a pan-European optional pension regime which responds to the needs of multinational companies operating in different countries and which can be used in place of multiple national-specific regimes.
In addition, Aon Hewitt has also called for:
– the establishment of a consultative platform involving occupational pension practitioners which can be used as a sounding board on market needs and developments
– an improvement of the monitoring and exchange of good national practices via existing European consultative fora
– more dynamic on-going assessments of the impact of the European legislative proposals and of measures already in place.
– avoiding changes to the solvency requirements in place, as additional solvency rules for pension funds would substantially increase the cost for the sponsor undertakings without improving in a cost effective way the protection of pension beneficiaries.
Source : Aon Hewitt Press Release
