25 July 2014

IPE: UK questions European Commission's ability to proceed with IORP II

The UK government has criticised the Commission’s approach to pension reform, noting that it pushed ahead with a revised IORP Directive despite concerns about the proposal's inadequacies.

In its Balance of Competences Review on financial services, the government questioned if the Commission should push IORP, given that pension regulation was for member states' decision. The report echoed views previously voiced by the National Association of Pension Funds (NAPF). It repeatedly cited the organisation as a source and noted there had so far been little evidence of a desire to create a cross-border pensions market requiring greater harmonisation of rules. “The differing characteristics across member states of the pensions sector argued for a strong national dimension to decision-making,” the report says. “The use of the single market competence as the legal basis for the IORP Directive raises questions of subsidiarity, as pensions policy is a matter for member states. “

The argument used in justification, that harmonisation will help foster more cross-border schemes, ignores the possibility there is little demand for cross-border schemes. ”It also expressed concern that the Commission had, on occasion, produced proposals after warnings from its own Impact Assessment Board that these were “inadequate”. The Board, set up in 2006 to scrutinise the European executive’s work, gave the IORP Directive proposal a “negative” rating, the government said. “The Impact Assessment Board performs an important role, helping to ensure Commission impact assessments are of high quality so the evidence base for proposals can be relied upon,” the report says.  “The opinions of the Board should be carefully considered, with reservations about impact assessments properly and transparently addressed before proposals are made.

 

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