Germany’s Arbeitsgemeinschaft für betriebliche Altersversorgung (aba) has called for a “fundamental revision” of the European Commission’s (EC) proposed supplementary pension package, as it branded the reforms unsuitable for occupational pensions.

In its position paper on the review of the IORP II Directive, the association listed several areas of concern with the current proposal that could harm “well-established structures of occupational pensions in Germany and other member states”.

It highlighted how occupational pensions in Germany are characterised by their collective organisation and by the triangular relationship between the employer (sponsor), employees and the implementing institution.

“These features fundamentally distinguish them from individual personal pension products. aba therefore emphasises the need to adequately take these specific structures into account in any European regulatory framework,” it stated.

It rejected the extension of the EU’s competences envisaged in the EC’s proposal, through delegated acts and EIOPA guidelines, as it would in practice lead to far-reaching full harmonisation – something it is opposed to.

A further key point of criticism concerned the scope of the proposed new requirements. It argued that many of the measures would entail significant additional costs without any clearly identifiable added value.

Therefore, it called for a comprehensive impact assessment with the involvement of the member states.

The association also flagged risks to the overall development of occupational pensions.

“Additional regulatory burdens could lead employers to turn away from providing occupational pension schemes.

"Moreover, the intended improvement in investment performance is undermined by parts of the Commission proposal, for example, by a potential alignment with Solvency II rules, which would favour more conservative investment approaches,” the aba stated.

Furthermore, it said a central issue is the safeguarding of member states’ competence to design their pension systems.

“The distinction between occupational and personal pensions, as well as issues relating to system organisation, the role of social partners or payout options, should remain within national competence. EU-wide requirements in these areas – for example, regarding information obligations – are therefore viewed critically by aba.”

As a result of its concerns, it advocated for a new approach that takes into account the specificities of occupational pensions and ensures proportionate and cost-efficient regulation.

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