The review of the IORP II Directive will not bring “big change” to cross-border pensions, European Insurance and Occupational Pensions Authority (EIOPA) chair, Petra Hielkema, has said.

Speaking at the CBBA-Europe Annual Conference in Brussels yesterday (8 October), Hielkema said there is “very little” cross-border pension activity, despite activity growing on the insurance side.

“If you look at the EU without the UK, you just don't see very much development [with cross-border pensions]. Now, one idea could be that maybe the review of IORP II would help here, and EIOPA has provided advice,” she said.

“The reality is that if we really want change when it comes to cross-border pensions, I do not think that the current IORP II Directive, including the review, including our advice, will bring that big change.”

Expanding on this, Hielkema said the advice EIOPA provided focused on evolution, whereas “if you really want to create a different environment for pensions, you need to take bigger steps”.

She continued: “Having gone through the IORP II review and coming to our advice, I do feel that currently the focus is still very much on dealing with each individual circumstance per member state… I think the reality is that we still have a long way to go when it comes to cross-border pensions.”

However, Hielkema believes that with a revised Pan-European Personal Pension Product (PEPP) and a potential cross-border savings product, there will be additional “thinking on cross border products, and maybe also cross border occupational pensions going forward”.

In September, EIOPA published a paper on the future of the PEPP, outlining the reasons behind its limited uptake and proposed reforms. It set out the authority’s suggested improvements to the PEPP’s design, with the aim of overcoming supply-side, demand-side and structural barriers hindering its broader adoption.

Speaking at the conference on the PEPP, Hielkema said: “The PEPP was introduced, I think, with a lot of good intentions. It's a simple product, it's a cross-border product. It is a digital product. It has low cost, and therefore, it could benefit many Europeans because I am very much convinced that the majority of Europeans just need simple, clear products that give value for money. At the same time, we see that the PEPP has not been a success at all. I think we have two real life PEPPs currently in the market, which is not enough to do what it needs to do. And that is why, at EIOPA we feel that it would be good to review the PEPP.”

“Now, there's two review clauses in the PEPP. One is for next year, [that is] already due, which is reviewing the cost cap, and then in 2027 there is an overall review. This is in the mandate with the European Commission, of course, when to start the review, but we think the PEPP would benefit from an overall review much more than only a cap review.”

EIOPA is also calling for automatic enrolment to become the norm for the second pillar. Hielkema cited the UK and Italy where automatic enrolment has been a success.

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