Abstract
The background to this paper is that what are called "pension funds” in some Member States of the European Union (EU) are in effect specialised life insurance companies who write individual pension policies anyone who wishes to subscribe to such a contract. They are sometimes referred to as “open pension funds” and they are quite different from the “closed pension funds”, common in the Anglo-Saxon countries and in the Netherlands (and elsewhere); which are sponsored by one employer for that employer’s employees only. Often the employer stands behind the closed pension fund, and guarantees (up to a point) the benefits that have been promised.
The regulations for supervising pension funds within the EU have not been harmonised, although the supervision of insurance companies has been through the Third Life and Non-life Directives. There is some pressure on the one hand for it to be possible to arrange pension funds on a cross-border basis (which would help multi-national employers) and on the other hand for pension funds to be supervised in a similar way in all Member States.
The European Federation for Retirement Provision (EFRP) represents the associations of pension funds in the separate Member States. Its officers were anxious that the form of regulation that is found for some of the open type of pension funds, some of which is quite appropriate for life insurance companies, should not be applied to closed pension funds, which are seen as being quite different.
In particular, in some Member States there are restrictions on the maximum proportion of the assets that an open pension fund may invest in “risky” securities, such as ordinary shares, and in some there are requirements that a certain minimum proportion of the assets should be invested in government bonds; which are seen as safer investments.
The EFRP was invited to make a presentation at a meeting of the Insurance and Pensions Supervisors of the Member States of the EU in September 1998, and I was asked by the EFRP to make such a presentation.
The regulations for supervising pension funds within the EU have not been harmonised, although the supervision of insurance companies has been through the Third Life and Non-life Directives. There is some pressure on the one hand for it to be possible to arrange pension funds on a cross-border basis (which would help multi-national employers) and on the other hand for pension funds to be supervised in a similar way in all Member States.
The European Federation for Retirement Provision (EFRP) represents the associations of pension funds in the separate Member States. Its officers were anxious that the form of regulation that is found for some of the open type of pension funds, some of which is quite appropriate for life insurance companies, should not be applied to closed pension funds, which are seen as being quite different.
In particular, in some Member States there are restrictions on the maximum proportion of the assets that an open pension fund may invest in “risky” securities, such as ordinary shares, and in some there are requirements that a certain minimum proportion of the assets should be invested in government bonds; which are seen as safer investments.
The EFRP was invited to make a presentation at a meeting of the Insurance and Pensions Supervisors of the Member States of the EU in September 1998, and I was asked by the EFRP to make such a presentation.
Volume
Toyko
Year
1999
Categories
Actuarial Applications and Methodologies
Investments
Asset/Liability Management (ALM);
Practice Areas
International Areas
Actuarial Applications and Methodologies
Regulation and Law
Practice Areas
Risk Management
Financial and Statistical Methods
Risk Pricing and Risk Evaluation Models
Publications
ASTIN Colloquium
