Bringing Central and Eastern European (CEE) countries' pension systems under the IORP Directive could lead to governments following Hungary's lead and shifting all second-pillar assets back into the country's social security system, the European Federation for Retirement Provision (EFRP) has warned.
Responding to the European Insurance and Occupational Pensions Authority's (EIOPA) Call for Advice (CfA) on the Directive, the lobbying group also warned that the review – the first step towards a new IORP Directive – was premature and should not view Solvency II as a starting point. The EFRP believes there is a risk that governments in the CEE might shift back their second-pillar pension assets to the PAYG system, if their mandatory systems were to be brought under the IORP Directive, without considering the fundamental systemic differences between the occupational systems and the mandatory second-pillar systems.
The organisation said implementation of the IORP Directive on the countries would only serve to reduce the coverage of funded pension provision in Europe, with the fallout not counteracting the gains made in reducing investment restrictions in the country. It said it hoped Hungary would not acquire the 'first mover' status and remain an "isolated and most regrettable initiative", referencing the country's recent move to shift the majority of private pension assets into the state treasury.
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