10 June 2008

France presses call for Solvency II on pensions

The French government has reiterated calls for a 'level-playing field' and argued all pension funds should be included under the requirements of the Solvency II directive, just weeks before it takes over the EU presidency, IPE reports.

The French government has re-iterated calls for a 'level-playing field' and argued all pension funds should be included under the requirements of the Solvency II directive, just weeks before it takes over the EU presidency.

 

Speaking at a Solvency II conference in London, hosted by the Association of British Insurers, Fabrice Pesin, deputy assistant secretary and head of the insurance division of the French Treasury, told delegates he considered the application of Solvency II on all pension activities – whether insurance or pension fund-based – as “logical” for the creation of “a level-playing field”.

 

“Pensions is a political topic in France and in the European Parliament too. We have a problem with this directive. Pension activities are provided by insurers and pension funds and some pension activities are treated under Solvency I rules. I think the long-term view is the application of Solvency II directive to pension activities would be logical.

 

It is a question of policyholder protection. It is a question of ensuring a level-playing field as there are some pension funds who want to export their product. It is impossible for us as politicians to say I’m open to some products with old rules and Solvency I protection,” said Pesin.

 

His comments were made during a panel session and in response to a question about whether the new Solvency II requirements should also be placed on all occupational pension funds, regardless of whether they are managed as defined contribution or defined benefit arrangements.

 

Speaking to IPE, Pesin stressed the French government would not be able to comment on such matters during the six-month presidency as its role is to find a compromise to any outstanding issues, including matters related to Solvency II.

 

In contrast to this public declaration of French opinion of Solvency II on pensions management – and which comes just weeks ahead of the EU presidency handover between the Portugese and French governments – Karel van Hulle, head of the pensions and insurance unit at the European Commission, suggested he believes it is right to delay any decision in the short-term, ahead of an EC discussion paper later this year.

 

Moreover, he appeared to suggest it might be more appropriate to maintain any solvency requirements within the existing Institutions of Occupational Retirement Provision (IORP) directive.

 

“What is a pension fund? We need to clarify what we mean by a pension fund. We refer to it within the scope of the IORP directive. The issue only came up at the last minute negotiations on Solvency II so we have to ask ‘how can we resolve this level-playing field’ argument? The IORP Article IV allows the member states to deliver Solvency I rules which match insurers and pension funds,” said van Hulle.

 

Peter Skinner, member of the European Parliament, threw his support behind the idea of tackling solvency issues related to occupational pension funds through the IORP directive.

 

“This area is fraught with problems, not because there is no sympathy to understand what is out there. But we are dealing with entities which have different ways of raising capital,” said Skinner.

 

“The appropriate way should be through the IORP directive. A lot of work has been put in to deal with the pension industry [through this directive]. And I rather hope and think this is the appropriate place to put any of that work into right now. Anything else is too traumatic and will cause a delay to Solvency II, because we don’t have the mode and impact assessments we require,” he continued.

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