Commissioner Barnier: Future of pensions - A major challenge for social cohesion and economic dynamism in Europe
25 March 2014
Speaking at the European Commission conference on pensions, Barnier said that pension schemes all over Europe would have to adapt to meet the current challenges.
Translated from the French
Barnier said that Member States are and remain accountable for their social security systems and the architecture of their pension plans - yet, the Commission can facilitate the efforts of Member States in this field, for example by recommending good practices and encouraging exchanges between different countries.
Much has changed since in the field of occupational pensions since the 2003 Directive:
-
First change - the crisis, which affected all financial actors, including pension funds and other providers of occupational pensions. We need to learn all the lessons of this crisis how to ensure that pension funds can continue to finance the real economy.
-
Second change - the introduction of a new European supervisory architecture. Since 1 January 2011, EIOPA has significant competences in the area of pensions and insurance. The current IORP Directive does not yet reflect this important fact.
-
Third point: We have seen the decline of defined benefit pension schemes.
-
Meanwhile, the so-called defined contribution plans, which are similar to mutual funds, have developed, as well as some hybrid regimes between benefits and defined contributions.
-
Fourth point: cross-border activities of institutions for occupational retirement have grown, but to a too limitedextent. We must take into account these developments and enable the single market to play its role fully, to share expertise developed in other Member States, and to allow companies to opt for cross-border funds.
-
Finally, the rules of Solvency II will soon be applying to insurers that offer pension products, sometimes in direct competition with IRP .
Faced with these developments, and as we mentioned in the White Paper on pensions in 2012, we decided to prepare a revision of the IORP Directive in 2003. This work, which is now coming to maturity, should allow us firstly to improve governance , risk management and transparency of information given to clients of pension funds and the supervisory authorities, but also to encourage cross-border activity of pension funds and specify investment rules.
The issue of solvency rules for occupational pensions are not part of this proposed revision. On this important but very complex topic, after many consultations, I felt that we still need more time to complete the necessary analytical work.
Upon my request, the European authority EIOPA has conducted a detailed study in 2013. This study provides a useful basis for future revisions, however, as was pointed out by EIOPA , it is a technically complex field in which there are many different systems in the Member States. For these reasons, EIOPA continues its technical work including the methodology and comparability of national systems and will report to the new Commission in 2015.
Besides social security and occupational pensions, personal pensions may represent an additional income for many European retirees. Personal pensions can help Europe face the demographic challenge while providing funding for our long-term real economy. Therefore, we need to look at different ways to make life easier for Europeans who wish to save more for retirement. This process should be rooted in a genuine Single Market. An initiative in this area could be beneficial but it will be at the next Commission to decide.
Two years after the White Paper "An Agenda for Adequate, Safe and Sustainable Pensions", the Commission published a memo on the progress achieved in this area. A conference on the future of pensions in Europe took place in Brussels on 26 March to review achievements and perspectives with EU and national decision-makers, renowned academic experts and senior stakeholder representatives. In the context of rapid ageing of European societies and increasing pressure of pensions on national budgets, the February 2012 White Paper put forward policy initiatives to support Member States' reforms of their pension systems, aiming to help women and men to work longer and save more for their retirement (see IP/12/140 and MEMO/12/108).
Commission press release
© European Commission
