AEIP input on DC Pensions Toolkit: social partners are key to the design and governance of supplementary DC schemes
Last week, the European Association of Paritarian Institutions responded to the European Insurance and Occupational Pensions Authority’s call for evidence to inform the development of a DC Pensions Toolkit.
In our input, we highlighted that it is a priority to promote the active participation and engagement of social partners in the design and governance of supplementary DC pension schemes. The involvement of social partners is paramount to ensuring adequate retirement income for EU citizens.
Financial and non-financial measures, such as auto-enrolment, can serve as relevant instruments to increase participation in DC pensions. In countries where occupational pension coverage remains underdeveloped and participation is largely voluntary, auto-enrolment mechanisms can be particularly effective, provided they are developed with the active involvement of social partners. Their success relies on a well-structured design, which should be built through social dialogue between employers and employees.
Regarding Value for Money, AEIP recognises the importance of ensuring that pension funds deliver adequate outcomes in retirement while safeguarding the interests of their members and beneficiaries. At the same time, we remark that paritarian institutions, which have equal representation of employers and employees in their board, already have a strong fiduciary duty and are structured to operate in the best interests of their members and beneficiaries. Introducing explicit Value for Money requirements would therefore duplicate the safeguards already embedded in the governance model of paritarian institutions. Such measures could impose disproportionate burdens on smaller pension funds and, as a result, negatively impact their ability to provide adequate pensions to their members and beneficiaries.
To see our full response, please see here.