European Commission to accelerate IORP II and PEPP reviews and tackle lack of scale

The European Commission (EC) is to move its review of PEPP and IORP II forward in an “accelerated” fashion, Tilman Lueder, the EC’s new head of insurance and pensions said last week. The Commission also plans to tackle the lack of scale in European pension funds.

Speaking at PensionsEurope’s annual conference in Bucharest, Lueder outlined a relatively tight timetable for carrying out the IORP II and PEPP reviews – an eight-week consultation on “targeted aspects” starting in May with a workshop for stakeholder engagement halfway through. 

Lueder gave no indication as to how the Commission might seek to boost scale or otherwise consolidate European pension funds. In the Netherlands, the process of reducing the number of pension funds has taken many years and is ongoing.

Lueder was appointed to head insurance and pensions within DG FISMA last year, and will steer the development of the Commission’s reform proposals for the IORP II Directive as well as the Pan-European Personal Pension (PEPP) Regulation. 

Pensions figure prominently in the Commission’s Savings and Investment Union (SIU) strategy, which seeks to further develop supplementary pensions and promote more investment in equities and private markets by pension funds and insurers.

The current idea is that the Commission would be ready to adopt legislative reform proposals in November.

With respect to the IORP II review, Lueder said there would be a focus on investment mandates and fostering more involvement in equity investment and private markets by the pension sectors.

Lueder said a lack of scale in funded pensions in Europe was an issue and that this distinguishes the EU – excepting the Netherlands – from countries like Australia and Canada. This was something that needed to be addressed, he said.

The chair of EIOPA, the European pension fund supervisor, has said the body would welcome “a pragmatic result” to the IORP II review.

PEPP options

As concerns the PEPP, where take-up has been extremely limited, Lueder noted the recommendations that EIOPA had already developed, and said there were several options on the table regarding the cost cap.

He also said employers should be allowed to participate and flagged the possibility of dropping the PEPP “as such” and developing a label instead.

Whatever route the Commission ends up taking, Lueder said the European Council, the highest EU body and representing member states, had made clear that national governments wanted to see proposals for improving the PEPP by the end of this year.