EUROPE - Sharon Bowles, Chair of the Committee on Economic and Monetary Affairs at the European Parliament, said the Alternative Investment Fund Managers (AIFM) directive needs "a lot of changes" as she fears it could make pensions unaffordable in its current form.
Speaking at the EFRP conference in Frankfurt earlier this week, Bowles told delegates a pension fund representative had informed the European Parliament earlier this month that a reduced yield from the adaptation of the portfolio to AIFM requirements would lead to a 10% contribution rise.
"Nothing is so risky for the consumer as not to be able to afford their pension," she pointed out.
"The current proposal for an AIFM directive creates both a prison and a fortress Europe for investments."
One of the points that needs changes is the "depositary liability", Bowles explained.
This was "superficially attractive" but if securities have to be held by law in a depositary in a third country the relative stability of this country is going to be priced into the return, she argued.
And as the need for insurance would increase prices in the sector "investing in riskier countries could feed through to all investors, even to those not invested in these countries or deter investors from some third countries altogether".
"A due diligence regime is the better solution," Bowles pointed out.
She also voiced scepticism on mooted restrictions on private placements, noting "but these are just a couple of many problems".
Other speakers at the conference also cautioned the European Union to ensure they do not take rash actions when it comes to regulatory measures.
Willem Handels, vice chairman of the European Pensions Forum, BusinessEurope, asked the Commission not to review pension fund regulations separately but "to take a broader look at retirement provision and its sustainability as well as national regulations".
And Patrick Burke, director of Investment Development at Irish Life Investment Managers, pointed out that he has "yet to see a solid business case for a harmonisation of quantitative measures for the pension sector" in Europe as it had to remain flexible for differences on a national level.
In an evening lecture on the EU's suggestions on a new European supervisory structure, Jacques De Laroisière also stressed: "What we need is not necessarily more regulations but more intelligent, adapted regulations."
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