The Dutch Federation of Pension Funds has responded positively to the European Insurance and Occupational Pensions Authority’s (EIOPA) consultation on technical advice for the review of the IORP II Directive, but highlighted areas that it felt needed attention.

It stated that it supported the IORP II Directive and appreciated the existence of a separate European vehicle for pension funds.

“We believe it is of the utmost importance that not only our existing pension system, but also the Future Pensions Act and the two new contracts fit well into a new IORP guidelines,” the federation stated.

The federation added that it was happy that EIOPA did not propose any fundamental changed to the directive and that the authority was cautious in recommending the introduction of level two regulations.

Despite the positives, the federation had objections to some aspects of the proposals.

It voiced concerns over the proposal for a breakdown of ‘low risk’ and ‘non-low risk’ pension funds, as well as that strict requirements could be imposed on the second category, which is said would effectively only apply to funds in a few member states.

Furthermore, the federation noted that EIOPA identified possible conflicts of interest in funds set up by commercial service providers, which the federation said the authority “could not adequately define”.

General regulations for managing conflicts of interests were proposed, and the federation felt that the problem statement and solution were formulated too broadly.

It argued that conflicts of interests are adequately controlled in the Netherlands, and it therefore disagreed with the proposals.

EIOPA recommended that the Uniform Pension Overview (UPO) be consolidated with regulations for the structure and format, but the federation argued that it would rather let go of the obligation of a fixed format.

“Instead of regulations on the form of information provision, we want standards for what substantive information must be provided,” the federation said.

“The form in which this is done should be able to be implemented at national level in order to optimise the relevance and effectiveness of this provision of information to members within national pension systems.”

EIOPA is also considering expanding the UPO with more information about sustainability, costs, investment risks and product choices.

“We do not think the UPO is a suitable means of communication for this,” the federation stated.

“This makes the UPO longer and more incomprehensible. It is important to make this kind of information easily accessible, but this can be done better in other ways.”

While the Dutch Federation of Pension Funds was open to the legal anchoring sustainability considerations to be included in investment decisions and to make sustainability part of the fiduciary duty, it warned against the possible undesirable effects of incoherent regulations.

“There is a risk that the adjustment will limit the freedom of choice in the SFDR,” its consultation response said. "That is worrying, because the SFDR will also be revised and may then give heavier responsibilities.

“What is special about pension funds is that they only carry a single product, namely a pension scheme. No undue restrictions may be imposed on associated investments.”

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