EUROPE - Member states of the European Union are facing a trend of increasing economic convergence on pension policies, rather than a more encompassing passage of harmonisation, former Belgian prime minister Guy Verhofstadt has found.

According to the ex-prime minister, who was recently named deputy chairman of the APG Groep Supervisory Board, pensions have become an important factor which will shape future budgetary policies of the EU member states.

Therefore, "it is evident that at least social economic convergence is necessary within the EU," said Verhofstadt, speaking at a seminar organised by APG in The Hague last week.

Verhofstadt, branded a federalists by his peers, thinks pressure will increase in most EU countries to implement reforms not only to the labour market, but to build a strong second pillar pensions system based of capitalisation.

Consequently, the European Commission, the European Central Bank and Eurostat will increasingly publish detailed recommendations, added Verhofstadt, although he recognised "how far these recommendations will lead to standardisation is hard to say".

Harmonisation has become a dirty word in Europe, according to Verhofstadt.

"If there is a word, it should be convergence - the determining of the minimum and maximum values in which certain schemes should develop."

In terms of EU legislation on pensions, Verhofstadt sees a revision of EU directive on Institutions for Occupational Retirement Provision (IORP) as the saving grace for legislation on pension portability and solvency requirements for pension funds.

"I think the portability directive is dead," he said, adding: "We should consider whether a revision of the IORP could be used to save what we can of the portability directive."

Verhofstadt also thinks the EC could work towards a solvency directive specifically for pension funds through a possible future revision of the IORP directive.

Chris Verhaegen, secretary general of European Federation of Retirement Provisions (EFRP), also at the seminar, proposed a new initiative covering portability with a minimum threshold might be more favourable than a revision of the IORP directive.

EFRP chairman Angel Martinez-Aldama said in a press statement last week any changes to the funding and solvency requirement of IORPs need to be made within the context of the IORP directive.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

Topics