© Bundesarbeitgeberverband Chemie

The contribution of occupational pensions to a sustainable pensions system from the employers’ perspective

Stefanie Lomb

European Chemical Industry Social Partners Conference April, 2013, Dublin

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Who we are…

BAVC = The German Federation of Chemical Employers’

Associations

Wage and social policy1.900 chemical companies550.000 employees11 regional member associationsLarge Section of Small and medium enterprises (SME)

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Green Paper – White Paper – Directive on minimum standards – IORP Directive

Starting point

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Green Paper – White Paper – Directive on minimum standards – IORP Directive

7 July 2010 Green Paper: start public consultation 15 November 2010 end public consultation 16 February 2012 White Paper 1 March 2012 Public hearing IORP Directive 7 June 2012 hearing EMPL/ECON 6 December debate on draft reports

“fight for competences” EMPL/ECON- ECON: Solvency- EMPL: Minimum standards

European Commission: the driving force

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Green Paper – White Paper – Directive on minimum standards – IORP Directive

26 february 2013 vote ECON (Rapporteur: Thomas Mann, EPP) 21 March 2013 vote EMPL (Rapporteur: Ria Oomen-Ruijten, EPP) April vote plenary 2012/2013/2014: Revision Directive on minimum

standards and IORP Directive?

European Commission: the driving force

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30 March 2011 Call for Advice COM to EIOPA 2nd half of 2011 public EIOPA consultations 15 February 2012 Advice EIOPA to COM 15 June 2012 Start public consultation on “technical

specifications” for a quantitative impact assessment (QIS) “Holistic Balance Sheet” approach which follows a

Solvency II logic 31 July 2012 end public consultation 2 October 2012 EIOPA sends “draft technical specifications” to

COM 16 October 2012 Start QIS 17 December 2012 end QIS Spring 2013 QIS report EIOPA to COM

EIOPA: advisor

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What is at stake?

Commission’s view on occupational pensions: financial products that should freely circulate in the internal market

Solvency II as a basis for regulating institutions for occupational retirement provision (IORPs); “level playing field”

Solvency II-like regulation would overstrain IORPs financially (2nd pillar of the pension system)

Initiatives already announced: revision IORP Directive (summer 2013), directive on the acquisition and preservation of supplementary pension rights (2013)

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Solvency II: Neither „good starting point“ nor „benchmark“

IORPS versus financial products:

IORPs differ considerably fromfinancial products

Longterm investments

Involvement of employees in supervisory

boards

Highly customized

and efficient: high coverage and low costs

Collective elements

Employer backed pension

systems

Social institutions with a non-for-profit approach

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The concept of occupational pension schemes

Occupational pension schemes vs. individual pension products of the financial markets:

Occupational pensions are employer-backed pension concepts Long-term benefit plans and collective elements, no extensive

options for the beneficiaries No third party interests Safeguarding of employee and employer interests at the level of

labour law Employers and employees are represented on the bodies of the

pension funds to guarantee interests

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The employers‘ view

Improvement of Retirement age and statutory pension systems Careful distinction between the different pillars of the pension

system – statutory, occupational and individual pension schemes

Principle of subsidiarity must be observed: reforms are up to Member States

More effective to convince people to work longer on a voluntary basis and develop flexible working time models

Long term pension reforms are better than several reforms that lead to uncertainty among the employees (and at least employers)

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The employers‘ view

Improvement of Occupational Pension Systems

Institutions for Occupational Retirement Provision (IORPs) are social institutions organised by the employers and employees (non-profit-organisations)

IORPs do not sell any financial market products traded on the free market. Occupational pension schemes do not cross borders. There is no market for cross-border products of social institutions and no added value compared to existing systems in view of the manifold interfaces to national tax and social security systems.

A pan-European “level playing field” is neither required nor does it make sense.

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The employers‘ view

Occupational pension schemes are a proven, reliable pillar of the pension system which corresponds to the objectives in terms of sustainability, safety, portability, and information

Additional regulation of occupational pension schemes would overstrain the institutions and carriers of occupational pension schemes financially - however money must be invested permanently f.e. in research and development to maintain the company’s innovative strength in an competition pressure environment

Moreover additional regulation would only increase bureaucracy and costs and would jeopardize the willingness of employers to offer (higher) occupational pensions on a voluntary basis

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Effects of additional regulations

IORPs

Financial burdens and overstrain

because of increasing capital requirements

Employers

Financial burdens and competitive disadvantages,

if capital has to be set aside for safety purposes and cannot be invested for

innovations and growth

Beneficiaries

Lower future benefits,because employers cannot

afford to increase its costs, -> less efficient and attractive

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The formation of alliances is important

The promising approach: social partnership

Common position paper ECEG (European Chemical Employers Group) und EMCEF (European Mine, Chemical and Energy Workers‘ Federation) (January 2011)

Common position paper BAVC und IG BCE (October, 2011)

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Common position paper (September 2012)

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Our targets

No additional regulations, especially solvency II based (HBS approach or similar models)

The social partners should be given more weight in the consultation process, because the subject of the consultation clearly concerns the “social policy field”

Occupational pension schemes negotiated by the social partners provide the best guarantee for people to receive an adequate pension

Tailor-made solutions should be carefully developed via social dialogue - Indeed, a clearer role for social partners is required

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What’s next?

Initiatives to be expected:

Parliament and Council will be decisive – and the social partners!

Directive on minimum standards; beginning 2013

IORP Directive; mid-2013

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Bundesarbeitgeberverband Chemie e.V.Abraham-Lincoln-Straße 2465189 Wiesbaden

Telefon +49 611 77881- 0Fax +49 611 77881- 23

info@bavc.dewww.bavc.de

Thanks a lot for your attention!