IPE: IORP Directive's Solvency II stance could 'stifle' cross-border pensions

15 December 2011

According to Bart de Wit, adviser at the Belgian Association of Pension Institutions, changes to the EU's IORP Directive might dissuade pension fund sponsors from launching cross-border vehicles, as new Solvency II measures pose a serious threat to European schemes.

Bart de Wit said several barriers remained for the implementation of cross-border funds in Europe, and that the change of prudential law within the second IORP Directive would be unlikely to encourage the spread of such vehicles. "Pension fund sponsors are currently concerned about social labour laws and how to comply with such regulations of both the home state and the host state", he said.

De Wit said the implementation of a new Directive with solvency and funding provisions similar to the Solvency II framework for insurance companies would therefore be "inappropriate". "Applying the actual proposals on IORP II might encourage scheme's sponsors to look more into unit-linked insurance products for which insurers will not provide any guarantee and the scheme member might end up with all the risks", he said.

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