EUROPE - The European pensions directive’s requirement that IORPs be “fully funded” does not mean exactly that, Irish pensions regulator Anne Maher told the IPE Multipensions Conference in Amsterdam. 

The European Commission has said at a meeting that it is happy that a pension fund operating cross border could introduce a recovery plan when needed, said Maher, who is chief executive of the Pensions Board.

“But at the point that the fund moved cross border it had to be fully funded,” she added.

Should a fund later fall below the fully funded level, it could then introduce a recovery plan.

Maher said that in her view the fully funded requirement could not be absolute as it would be impossible for any defined benefit scheme to operate cross border with the level of funding that would be required to be fully funded.

Maher said she had asked the Commission whether a 10-year period would be acceptable as a recovery period, in line with that allowed under Irish rules for local pension plans. The EC had not reacted negatively to this question.

The Irish authorities have not decided what to do on this point, she added. They could allow 10 years for IORPs but it could be less.

She also pointed out that the Commission might not have the final say about the interpretation of the directive, which could be decided by the European Court of Justice.

Maher also reiterated her objections to the Solvency II requirement for insurance companies to apply to pension funds.

“I think it could be the death note of DB schemes”, she said.

But Maher felt the EC could have a different template under Solvency II requirements for pension funds.

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