The NAPF has commented on the new EU Pensions Directive (Directive on Institutions for Occupational Retirement Provision or ‘IORP Directive’), published by the European Commission.
The Directive introduces a wide range of new requirements on pension scheme governance and communications to members. Commenting on the new requirements, Joanne Segars, Chief Executive, NAPF, said:
“Whilst the NAPF strongly supports initiatives to ensure that pension funds are well run, this new Directive simply adds further costs and administrative burdens without delivering practical benefits for members.
“The new Directive is not accompanied by an impact assessment, but the EC’s briefing papers estimate the one-off implementation costs of the new Directive at €22 per member – a cost of around £328 million for UK private sector schemes – with a further £7.5m per year in annual recurring costs.
Ms Segars added:
“The NAPF is deeply concerned by the lack of rigour behind the new IORP Directive proposal – particularly the absence of an approved impact assessment. EU interventions can have major ramifications for pension schemes, and it is important that their effects are thoroughly considered to get it right.”
The NAPF warns that the standardised EU-wide ‘Pensions Benefit Statement’, which schemes would have to send to members, takes no account of the diversity of pension systems across the EU’s 28 Member States. The ‘Risk Evaluation for Pensions’ report would duplicate the risk assessments that good pension schemes already carry out. The requirement for professional trustee qualifications points in the right direction, but should be amended to recognise the good progress the UK has already made by implementing The Pensions Regulator’s requirements for trustee knowledge and understanding.
Commenting on the European Commission’s long-term finance paper, also published today, the NAPF’s Policy Lead: EU and International, James Walsh commented:
“On a positive note, it is good to see the European Commission recognises the role of pension funds as long-term investors in the EU economy, but there is work to do on both supply and demand. On the supply side, the NAPF will encourage the EC to ensure its regulations incentivise long-term investing. Regarding demand, the EU must now work with national governments to ensure ready availability of projects that would attract long-term pension funding.”
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