European Policy Analysis Volume 2, Number 1, Spring 2016 | Page 54

Second Tier, Second Thoughts

like sustainability tests for group pensions
or the design of disclosure documents.25
The remainder of stakeholder comments
(EIOPA 2014a, com. 81, 82, 85, 86, 89,
94, 98) admonishes EIOPA (and the
Commission) about overlaps and potential
contradictions between already existing
regulatory strands. These are mainly an
effect of the dichotomy of product and
provider regulation. If, for example, a
pension fund and an insurance company
offered the same pan-European PPP,
under existing rules, they would fall under
different regulatory regimes, and the 2nd
tier could add a second layer for both,
possibly rendering the playing field both
uneven and overly bureaucratic.26 When
directly asked (in Question 24) whether
EIOPA should focus on either product or
provider rules, however, surprisingly few
stakeholders give an opinion. None favors
a sole focus on providers, four think
EIOPA should only address products, and
six suggest a two-pronged approach.27

Sometimes different stakeholders
disagree less about regulatory options
than about assumed market dynamics,
which can be illustrated with two examples
regarding EIOPA’s Question 9 (about
provider-specific prudential obstacles to
a more integrated market). While Groupe
Consultatif urges EIOPA not to include
any guarantees in a standardized PPP

(EIOPA 2014a, com. 235), the Bulgarian
Association of Supplementary Pension
Security Companies (EIOPA 2014a,
com. 231) opines that such provisions
would turn out meaningless in a more
competitive market, because market
forces would generate pressure toward
very attractive terms for consumers. In
the second example, market dynamics
are argued to be much weaker or even
absent by one of the stakeholders. The
Luxembourg-based
Association
of
International Life Offices (EIOPA 2014a,
com. 225), on the one hand, points out
that death benefits “in an insured PPP”
might probably constitute “obstacles to
transfer to or from a noninsurer”. The
Association of the Luxembourg Fund
Industry, on the other hand, surmises that
“insurers may not seek to offer personal
pension products in a systematic manner
throughout the European Union” (EIOPA
2014a, com. 226).

Were EIOPA—in the interest of
nondiscrimination—to define a rather
broad class of 2nd tier PPP that gives
several options to customers, some
stakeholders insist on the regulatory
setting of a default option (EIOPA 2014a,
com. 494 and 498). This would, of course,
reintroduce official favoritism of certain
providers through the back-door, if only
in the shape of a more or less powerful

25

Admittedly, though, it might be a challenge to devise unified a pan-European disclosure document,
and to comply with it might be much easier for large providers with strong, internationally versed legal
divisions. Thus, ironically concentration processes might be catalyzed in a market where the actual
regulatory goal is to avoid cluster risks.
26
The German Insurance Association provides a very simple, if somewhat one-sided solution: “we
suggest taking the insurance regulation as a benchmark which includes PPPs provided by insurers and
sufficiently reflects the true risk profiles of the providers” (EIOPA 2014a, com. 90).
27
The numbers are nearly identical concerning question 25 about “same risk—same rules—same
capital” (on this issue, see Section 2), and the main divide here is whether the risks covered by different
existing PPPs are fundamentally similar or not.
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