The European Federation for Retirement Provision (EFRP) has published the results of its survey on the implementation of the Directive on the activities of Institutions for Occupational Retirement Provision (2003/41/EC) (the IORP Directive). The EFRP represents the various national associations of pension funds and similar institutions for occupational pension provision and is recognised as the leading voice in Brussels on workplace pensions.
The IORP Directive is the basic regulatory framework for funded pension providers with a workplace connection. It:
- introduces the prudent person rule as the standard for investment practice;
- delivers an effective prudential framework;
- acknowledges IORPs as specialised financial services providers with their own set of rules; and
- is the first EU law relating to pension matters to recognise that financial services issues must dovetail with labour and social policy.
The survey was conducted among market participants across Europe and includes the following conclusions/observations:
- implementation of the IORP Directive has been protracted but early indications are that it has contributed positively to market integration and development of occupational pension provision throughout Europe. The EFRP believes the IORP Directive should be given time to deliver its full potential;
- the IORP Directive should enable companies and financial service providers to create a platform for pan-European pension provision secured by a pan-European supervisory network;
- the introduction of the prudent person rule for pension funds has been welcomed and a liberalised investment environment for pension funds is seen as crucial if the role of private pension providers is to be secured over the long term;
- the possibilities for the development of cross-border activities have increased and should lead to lower administrative and investment costs in years to come. Tax issues were most commonly cited as hurdles to the cross-border activities of pension funds;
- implementation of the IORP Directive has had a substantial impact on national supervisory frameworks and in almost all instances has led to more sophisticated regulation and supervision;
- it is felt that the IORP Directive has brought the issues of both occupational and private pensions to the fore, with public debate on retirement provision, ageing and social policy being given added impetus. It has established increased awareness of demographic challenges and strategies to meet those challenges; and
- survey participants would welcome clarification of some of the concepts in the IORP Directive, such as full funding, information rules and ring-fencing.
View the survey results