10 April 2015

PensionsEurope responds to EIOPA consultation on Good Practices on individual transfers of supplementary occupational pension rights

In January 2015 EIOPA published the consultation paper report on Good Practices on individual transfers of supplementary occupational pension rights, which relates back to the Call for Advice on portability EIOPA received from DG Employment and Social Affairs. PensionsEurope has provided its input.

Direct transferability of pension capital can only happen if there are clear mutual agreements between Member States and institutions. As mentioned, a general right to cross-border transfer of pension rights or capital can be problematic for some occupational pension schemes in the EU as well as to their members. Differences in life expectancy between Member States are significant, which if not properly taken into account, can result in an imbalance between outgoing and incoming transfers. This is particularly the case for DB schemes transferring pension rights. Moreover the technical, actuarial, legal and fiscal challenges show the complexity of cross-border transfers. Importantly, the main areas do not fall in EIOPA’s remit.

PensionsEurope finds it important to highlight that workplace pensions are regularly not-for-profit and some/all of the costs are borne by the employer. Considering the role of the employer, it becomes apparent that workplace pensions are very different from personal pensions. Workplace pensions are characterized by the triangular relationship between employee, employer and the IORP Personal pensions are built on a contract between a provider and an individual. They follow a totally different concept. The term “supplementary” in the title of the consultation is therefore misleading as it includes both workplace pensions as individual pensions. PensionsEurope emphasized the importance of not mixing these two different systems. Transfers between workplace pension schemes and personal pension schemes are often, even domestically, not possible due to the different tax arrangements and the different setup of a scheme.

Moreover, PensionsEurope suggests to replace the term ‘rights’ in the title of the Consultation with the more accurate term ‘capital’. The transferring scheme calculates a capital value based on the given pension promise, the receiving scheme then uses this capital value to calculate in turn what kind of pension promise the new scheme can offer based on that.

PensionsEurope welcomes the fact that EIOPA invites stakeholders to comment on the Report on Good Practices on individual transfers of supplementary occupational pension rights before sending the Report to the European Commission. However, PensionsEurope doesn’t find the way the Consultation is organized conducive to a good discussion. Asking concrete questions is in PensionsEurope's view a better way to address the impediments and the possible solutions towards overcoming these.

Full PensionsEurope response

Full  Good Practices

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