The EU has moved forward in its legislative approach for capital reserves for pension schemes has moved forwards in Brussels, with Commissioner Charlie McCreevy opening a "broad" public consultation exercise. The hunt for a solution dates back at least to 2007, when it was decided to carve out Solvency II provisions from applying to occupational pensions.

The ‘Consultation on the harmonisation of solvency rules applicable to institutions for occupational retirement provisions (IORPs) covered by article 17 of the IORP directive and IORPs operating on a cross-border basis' was launched in early September. The deadline for submitting responses is 28 November 2008.

The stated purpose of the consultation is "to collect the views from all stakeholders concerned whether they believe that, from an internal market perspective, a further harmonisation of the solvency regime for IORPs  under Art 17(1) and for those operating on a cross-border basis is desirable or not". The consultation has been welcomed by the UK's National Association of Pension Funds. Peter Skinner, European Parliament rapporteur for Solvency II, tells IPE "I think it is appropriate."

Background to the consultation includes a report by the Frankfurt-based Committee of European Insurance and Occupational Pensions Supervisors' occupational pensions solvency sub-committee that highlights problems resulting from the large differences across the EU on solvency mechanisms for IORPs. 

Its survey on "fully funded, technical provisions and security mechanisms in the European occupations pension sector" was published in April.

The focus of the EU Commission's consultation is on IORPs subject to Article 17, "because they underwrite liabilities to cover against biometric risk, or provide guarantees of a given investment performance or a given level of benefit".

The Commission continues that the directive has been implemented by all member states only last year and time is still needed for its full effects to unfold. It notes that there is a trend towards more risk-sensitive and transparent prudential supervision of occupational pension funds.

The Commission emphasises "that it has no  pre-conceived ideas on the way forward at this stage and there will be no automatic extension of the Solvency II directive proposal to IORPs subject to Article

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