UK concerns after creation of pan-European pensions regulatory body

This week the European Union finance ministers gave their green light to the European Authority on Insurance and Occupational Pensions (EIOPA), which is planned to be up and running in January.

James Walsh, senior policy adviser at the National Association of Pension Funds (NAPF), said: “EIOPA’s remit will be defined by EU legislation. We would not welcome any attempt to extend its reach into areas that should be decided at member state level.”

The new EU body – as well as the other two on banking and the securities market – will work in tandem with the existing national supervisory authorities.

It will combine nationally based supervision with coordination at the European level in order to foster harmonised rules and supervisory practice and enforcement, the EU said.

A spokesman for the Pensions Regulator said the watchdog is working "with colleagues within government to ensure that the voice of the pensions industry is heard during this restructuring process”.

Bill Galvin, acting chief executive of the regulator, is on the managing board of the current structure.

The NAPF also warned of the specificity of pension schemes and their regulation. Walsh said: “Unlike insurance products, pensions are paid out over the long-term in a reasonably predictable way. They need their own regulatory regime that works with the grain of the pensions industry and supports best practice.”

He also called for more clarity on how EIOPA will carry out its remit to set technical standards for the provision of information to national-level authorities. And raised the concern EIOPA could add extra complexity or cost that would make provision of pensions more expensive.

The three authorities might take on more powers through the years on the top of what was originally envisaged by the existing agreement.

EU finance ministers decided the European Commission will assess every year whether the remit of the supervisors should be expanded. In addition, new EU directives could give them more authority over specific areas.

Mats Persson, director of Open Europe, a think tank, said: “This proposal is moving substantial control over financial services away from national authorities and governments. Once established, the EU supervisors are likely to extend their powers incrementally, since the proposal is designed to allow for more and more laws to come under their authority.”

The European Parliament will vote on the existing proposals during its plenary session on September 20.