European Policy Analysis Volume 2, Number 1, Spring 2016 | Page 55

European Policy Analysis Topic 3: New (Im-)balances between the Pillars? nudge. A similar effect with disputable legitimacy could be expected if EIOPA indeed followed through on its ambition to put “PPP members […] in a position to select products characterized as good “value for money” (EIOPA 2014b). Here, EIOPA is apparently tempted to overburden the drive for transparency about PPPs’ costs that in itself is backed by virtually all stakeholders (in their answers to questions 27, 56 and 58 from EIOPA 2013). Of course, as of today the actual costs to consumers are often hidden, especially in plans based on rather activist trading with relatively high and/or highfrequency portfolio turnover. Yet, as EIOPA acknowledges elsewhere (EIOPA 2014b), neither costs and real returns nor past returns and future returns are necessarily systematically linked. Thus EIOPA’s quest for more and better customer information is in danger of losing legitimacy when it is coupled with unaccomplishable claims about naively simple recommendations to buyers.28 Nearly all general comments given by stakeholders which refer to the pillar metaphor either cling very rigidly to certain aspects of it or question its future viability altogether. Within the former group, representatives of occupational pensions tend to fend for a broad definition of the 2nd pillar and a narrow mandate that restricts EIOPA’s PPP activities to few aspects of the 3rd pillar. In this mould, the German working group on occupational pensions (Arbeitsgemeinschaftbetriebliche Altersversorgung, aba) emphasizes that the specific characteristics of prevalent PPP products in EU member states correspond with the respective designs of the 1st and 2nd pillars there. Therefore, it urges EIOPA to strictly restrict its PPP initiative to providers “who currently are not covered under any EU Directive and work to close these gaps” (EIOPA 2014a, gen. com. 4; also cf. gen. com. 14 by the German Insurance Association).29 The UK National Association of Pension 28 In the discussion of a question pertaining to our following third topic, EIOPA’s strong confidence in customer information was also challenged. Question 29 reads: “What key questions identified in the area of occupational pensions (‘Will my pension be sufficient for my demands and needs? If not, how much will the shortfall be and what can I do to improve the situation?’) might be relevant for personal pensions?” (EIOPA 2013) Insurance Europe remarked in its answer that “the question in parentheses could not be answered by providing customer information”, but required “a thorough assessment of the personal situation” (EIOPA 2014a, com. 621). 29 Even more restrictive (and potentially self-serving) is the role Pensionskasse der Mitarbeiter der Hoechst-Gruppe, a German occupational pension provider, envisages for EIOPA. In their eyes, it should primarily advertise 2nd pillar products in markets where it is underdeveloped. The introduction of a 2nd tier PPP, “[o]n the other hand, […] would lead to a fragmentation in the area of supplementary pensions going hand in hand with an increasing confusion and insecurity of the citizens on the selection-process of one or several supplementary schemes. At worst, such confusion and insecurity will lead to a declining coverage ratio of all supplementary pension schemes and would therefore run counter to the objectives pursued by the European Commission to avoid old-age poverty and to ease the public pension sector(s)” (EIOPA 2014a, gen. com. 24). Furthermore, this stakeholder worries about potential “regulatory arbitrage at the expense of the individual/insured persons” (ibid.) if EIOPA’s role as a pan-European regulator were strengthened. 55