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The European Pension Fund Directive, which has been in force since 2003, is designed to facilitate the provision of a European cross-border pension scheme. On the basis of this directive, some member states have over the previous years pro-actively implemented specific legislation to stimulate the establishment of dedicated cross-border pension service providers from their jurisdiction, such as the Premium Pension Institution (PPI) in the Netherlands, the Pension Savings Association (ASSEP) and Pension Savings Company with Variable Capital (SEPCAV) in Luxembourg, and the Organisation for the Financing of Pensions (OFP) in Belgium. There is a fear, however, that achievements in the traditional funded (defined benefit) pension systems may be eroded by further European integration of the pension sector, that Brussels may for instance introduce legislation ‘Europeanising’ the pension reserves held by the local pension entities of the member states.
Banks and insurers must adhere to basic European norms that promote the stability of the banking and insurance sectors and thereby the European economy. The European Insurance and Occupational Pensions Authority (EIOPA) aims to subject European pension entities to a similar regime by revising the current Pension Fund Directive. In our opinion, this would ultimately serve to protect members of pension schemes and, for example, to prevent pension funds from allowing a lack of clarity to exist about their ability to meet their obligations towards their members. However, there are those in the pension sector – as well as, for example, certain Dutch politicians who see such a European norm as unnecessary meddling – that “Europe should keep its hands off our pension reserves”. These representatives evidently prefer to keep decision-making powers in their own hands. In recent years, however, many members of Dutch pension schemes have had to adjust their expectations regarding Dutch retirement provisions considerably. With a European framework, Brussels could lead the way and thereby prevent such disappointments.
As an accompaniment to a European framework, the goal of further integrating the European pension market could be achieved by putting into place common (basic) rules regarding the accrual and payment of retirement provisions that could at least be provided, in part, by local or cross-border pension entities, as an alternative to local pension rules in each member state.
A scheme that in any case establishes legally clear, individual rights for members could be a good starting point. For that matter, experts in the pension sector have long been pondering these solutions and EIOPA, too, is now investigating the possibility of taking the first step in this direction. The common framework provided by a European Pensions Union and a European basic pension scheme would protect members of pension schemes across Europe in the accrual and enjoyment of their pension entitlements. It would also support the complex and developed UK and Dutch pension sector, as well as international companies that have cross-border operations. Furthermore, it would provide a general boost to European economic stability and the accomplishment of social objectives. The pension issue, therefore, requires a European approach.
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