AGE position statements AGE at the EC Pension Forum: Look at adequacy and decumulation phase of supplementary pensions

The Pension Forum is a regular meeting, organised by the European Commission, bringing together stakeholders such as EU member states, trade unions, employers, and pension providers on the issues of supplementary pensions. In 14/10/2014, the Forum focussed on the promotion of supplementary pensions, the portability of pensions, and draft code of conduct for pension providers and the recast of the directive on Institutions for Occupational Retirement Provisions (IORPs).

New Pension Adequacy Report announced

In the new European Commission, the mission letter to Marianne Thyssen, candidate for becoming Commissioner on Employment and Social Affairs, clearly mentions the ‘modernisation of social protection’, a process that will have a direct impact on occupational pensions, exposed Lieve Fransen from DG Employment. She also reaffirmed that reforms in future programme countries will be subject to a social impact assessment in the new Commission. Fransen announced a new Pension Adequacy Report, to be adopted in summer 2015 by the Council to monitor the developments since the 2012 report. The report will include a greater attention paid to gender differences.

Promote supplementary pensions, ensure quality and standards for decumulation

A discussion was held on the ways to better promote supplementary pensions. The Commission has issued recommendations on supplementary pensions, but not to a high number of member states. According to the 2012 White Paper on Pensions, supplementary pensions were to be developed in order to ensure pension adequacy while statutory pensions are under pressure. Member states and social partners were however rather asking the Commission not to become more active. AGE Platform Europe’s Secretary General called for paying more attention to the rights of pensioners in the decumulation phase, as regulatory efforts have rather focussed on the accumulation phase in terms of providing information to contributors. AGE also stressed that more needs to be done to ensure the quality of supplementary pension schemes and to pay attention to the adequacy of pensions when system switch from a predominant reliance on redistribution towards a greater role for supplementary pensions. Mrs Parent warned to forget those who have never had the chance to pay into supplementary pension schemes. She was joined in this call by the European Trade Union Confederation.

Pension providers’ regulation: inconclusive view

In view of the recast of the Directive on Institutions for Occupational Retirement Provisions, contrasting views were presented. Many member states, employers and pension providers argued against the planned recast, saying that increased information to beneficiaries will represent a significant burden on pension schemes. The argument went that as the consumer generally has no choice, pension schemes should not be regarded as a financial product under the rules of the internal market, but as providers of social protection with a social purpose. AGE questioned that providing more information will be detrimental, as information is needed for contributors in order to know whether they have to save more for retirement or not. Many member states voiced the view that pension systems are so diverse across Europe, that European harmonisation will not have the desired effects. Businesseurope criticised that the Commission should set minimum standards and that the proposed recast of the IORP directive was too detailed and too prescriptive.

A code of conduct for pensions providers?

The Commission proposed a draft code of conduct for pensions providers, aiming to assemble good practices along certain lines, such as adequacy, safety, transparency. Member states were sceptical of the code, but agreed that a repository of good practices could be a good thing. According to many members, the code should stay very general.

Portability of supplementary pension rights: challenges in the transposition

The Commission presented the recently adopted directive on the portability of supplementary pension rights, laying down the requirements to acquire entitlements under the scheme, and to preserve dormant rights when a worker moves to work abroad. The directive does not include provisions to transfer the assets of occupational pension schemes to another country, however. The Commission asked what would be the foreseen challenges in the transposition, in order to find solutions.

Some discussion was stirred by a provision that allows beneficiaries to receive a cash payment for very low sums that have been accumulated before moving countries. The provision requires the informed consent of the beneficiary. In the UK, sums under 10,000 pounds move automatically to become part of the next occupational pension scheme of a person, without needing consent. Germany was wondering what would happen with very small amounts that would remain with the original pension provider, creating administrative costs that might outweigh the amount deposited.

The next Pension Forum will be held in spring 2015 in order to discuss the draft report on pension adequacy. The Commission announced that a consultation might be held on the decumulation phase, as AGE has called for.

For more information, please contact Philippe Seidel at the AGE Secretariat <>

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