06 June 2002

ABI welcomes agreement on EU Occupational Pensions Directive

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The ABI (Association of British Insurers) has welcomed the announcement of a political agreement on the occupational pensions directive by the European Council of Economics and Finance Ministers (ECOFIN). For the UK insurance and pension industry, the Directive will be a key step towards creating a single market in financial services.

The ABI strongly supports the Directive’s aim to create a EU wide prudential framework for cross border pension schemes that will protect the rights of future pensioners. This new structure will help pension schemes operate more efficiently, especially in respect of financial investments and cross border transactions.

The Directive is based on the “prudent person” approach to asset allocation. Whilst allowing member states to set at a national level more detailed requirements for pension schemes, but within certain limits.

Joanne Segars, Head of Pensions at the ABI commented:

“We believe the prudent person approach is a sensible one, as it has produced good returns over the years for pension funds. The Directive complements the UK regulatory system for pensions and it will allow pension schemes the freedom to continue providing pensioners with strong returns without further unnecessary regulatory burdens.”

In October 2000, the European Commission adopted the proposal for a Directive on Institutions for Occupational Retirement Provision (Occupational Pensions Directive). The aim of the proposed Directive is to establish a Single Market in the provision of cross border pension schemes by December 2003. This will be achieved by:

harmonising prudential rules for product providers

liberalising investment rules

providing technical provisions and funding rules

The Directive also aims to give free choice of authorised product providers across Europe.

The ABI has been actively engaged in the debate on the EU Occupational Pensions Directive from the beginning. We have fully supported the Commission's efforts and determination in ensuring that the core principles of this Directive will be right for the future EU pensioners and the industry.

© Association of British Insurers