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IPE's Con Keating said: "It is most important to define the markets in which we are concerned about competition. The occupational pension scheme offers pension benefits to its employees – it does not offer them to the public at large. The insurance company provider offers them publicly. An insurance company may offer DB pensions to employees of private sector companies as part of their employment contract, but this is a matter of administrative convenience for the sponsor employer."
"The Commission appears to regard both pension schemes and insurance companies as financial institutions and seems to be believe this merits equal regulatory treatment. It does not. A corporate treasury may provide financial services to other members of its group, but we do not require it to operate and be regulated as if it were a bank, precisely because it is not offering these services to the public. Indeed, the identification of an occupational pension scheme as a financial services enterprise is erroneous."
"Organisation of pension provision through financial markets is less efficient than occupationally. This arises in part because the pension scheme has recourse to the sponsor's production, but, in larger part, it is because financial markets are far more volatile than this. The difference is important: it is of the order of 1-2 per cent a year in return."
"It is worth considering the incentives associated with funding as a security mechanism. The idea of own funds is deeply misleading – no institution possesses own funds. They are the property of some other person. In the case of insurance companies, these are usually shareholders. They have put capital at risk in the expectation that the management of financial asset and liability contracts can be effected profitably."
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