European Policy Analysis Volume 2, Number 1, Spring 2016 | Page 56

Second Tier, Second Thoughts

Funds (NAPF), representing 400
providers, 1 trillion pound of invested
capital and 16 million employee contracts,
fears an irritation of the British market
for occupational pensions if the relatively
recent auto-enrolment products30 were
defined as being part of the 3rd pillar by
EIOPA and were the Commission and
regulated as PPPs accordingly (ibid., gen.
com. 20). The Netherlands’ Ministry of
Finance, to include a voice from a third
of the four big markets for occupational
pensions, underscores that the 2nd pillar,
which in the national definition covers
all pension plans with an employer
contribution accounts for 43% of total
pensions paid there, and that its national
regulation significantly differs from that
of the 3rd pillar (EIOPA 2014a, gen.
com. 21). Subtext: And we want it to stay
that way. Pensions Europe, an umbrella
group for occupational pension lobbyists,
summarily calls for schemes “linked
to a current or previous employment
relationship” (EIOPA 2014a, gen. com.) to
remain outside the scope of EIOPA’s PPP
agenda.31

So clearly the tussles about pillar
definitions and EIOPA’s mandate for a 2nd
tier PPP have an element of turf war about
market segments to them. Yet the second
group of stakeholders just mentioned,

the one questioning the usefulness of the
pillar metaphor and its associated border
fences, put forward an argument phrased
spot on by the (UK-based) Investment
Management
Association:
“[T]he
distinction in reality between pure DC
funded arrangements (e.g., Pillar 1 bis,
Pillar 2 occupational and Pillar 3 personal)
lies often in governance and distribution
arrangements.
Fundamentally,
the
pension arrangements themselves may
not look very different from one another.”
(EIOPA 2014a, gen. com. 18). This raises
the question how different regimes can
legitimately be applied to essentially
identical pension products to be found
across all three pillars. Of course, within
each pillar they are combined with and/
or compete with distinct other products,
but the parting clearly exhibits an artificial
element. For example, if investment into
a pension fund falls into 1st pillar bis,
its tax treatment will often receive 1st
pillar privileges, while the same product
is treated less favorably in pillar three. So
the axis of (non)discrimination between
member states is complemented by the
axis between pillars, and thus calls for
harmonization (like the one by ABI for a
single pensionable age, cf. EIOPA 2014a,
com. 318) acquire a multidimensional
character.

30

“These [DC] schemes are established by the employer but take the form of a contract between the
individual saver and a pension provider.” (EIOPA 2014a, gen. com. 20).
31
In Question 6, EIOPA explicitly asked stakeholders whether they believe that a “personal pension
contract […] chosen by an employer” (EIOPA 2013) should be considered a PPP. Sixty per cent of
those answering this question do not think so. Ten per cent have no firm view or feel that the crucial
distinction is actually whether an employer involved is giving any sort of guarantee (for the latter view
cf. EIOPA 2014a, com. 154). The coalition of those 30% who are in favor of including employer-chosen
pension plans into EIOPA’s PPP activities encompasses large pension fund and insurance associations
from big national markets—and the Commission’s already mentioned brainchild FSUG; an alliance
that is as typical as it is problematic, since the Commission thus creates the impression of including
consumer interests with a vehicle of its own creation.
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