Gabriel Bernardino has suggested that there should be a Europe-wide framework governing occupational defined contribution pension funds.
Speaking at the European Insurance and Occupational Pensions Authority’s annual conference in Frankfurt, the supervisor’s chairman said any such framework would be able to reduce costs by operating on a cross-border level. “At an EU level, while recognising the high sensitivity around pensions discussions, a further important step would be to design a simple and transparent EU framework for defined contribution occupational schemes. This framework should be capable to take full advantage of the potential of the EU internal market by providing a cross-border platform that would reduce costs, support long-term funding of the EU economy and ultimately deliver better pension outcomes.”
The chairman’s comments come after PensionsEurope released a paper outlining key design principles for what it regards as modern DC, focusing on member behaviour, adequacy of the accrued pension pot’s size and risk-sharing. Bernardino also suggested new tools might be needed to ensure constructive dialogue between social partners involved in defined benefit (DB) funds, and that DB was becoming “more and more a legacy issue”
“There is a need to build appropriate incentives for a proper dialogue between employers and employees on their long-term sustainability,” he said. However, not wishing to underplay the importance of properly valuing liabilities, he added: “This important dialogue should not be based on valuations and risk assessments that deny economic reality.
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