Michael Bow talks to Matti Leppälä about the challenges that face him as the new secretary general of the European Federation for Retirement Provision.
Brussels is a strange town to the uninitiated. With its odd mix of old squares and glass-and-steel bureaus, confusion greets many a newcomer.
Matti Leppälä, a trade union lawyer from Finland, is one new arrival having to familiarise himself with the city - along with the steady stream of financial regulation coming from inside its corridors of power.
Leppälä, 51, has just moved to Brussels from his native Finland to take up the role as the next secretary general of the European Federation for Retirement Provision, the European-wide industry trade body representing pension stakeholders.
One item will be high on his agenda when he takes the reins in 2012: plans to expand the Institutions for Occupational Retirement Provision Directive to bring it into line with Solvency II-type regulation.
"These issues are really important for the growth and employment of Europe," he says, sitting down to chat to PP in the Cheapside offices of the National Association of Pension Funds last week. "We think it's seen too much as a financial market issue and not enough as a social and labour market issue. We need to have the macroeconomic impacts looked at and understood."
If firms are forced by the European Commission - the body responsible for driving the policy - to increase their capital buffers, it will have a dramatic impact on risk sharing arrangements, Leppälä believes, forcing many defined benefit schemes to close.
"Companies won't choose to bankrupt themselves. The consequences are going to fall very much on the individual," he says.
"It really doesn't make sense to make the thresholds to providing private provision very high. You should make it low enough so the companies and employees would find it possible to keep the existing one and start new ones and build their pension savings."
Trade bodies in Britain such as the NAPF and the Confederation of British Industry have been vociferous in their condemnation of the plan, along with the Department for Work and Pensions, which says it is "gravely concerned" over the proposals
So far their case has fallen on deaf ears, with EC commissioners Michel Barnier and Laszlo Andor seemingly keen to push ahead. Why is the campaign against Solvency II for DB schemes being ignored?
"This is part of a larger trend and bigger movement towards a risk based solvency framework. There are the banking rules and there is this notion that the same should apply to pension funds," Leppälä says.
"The pressure is coming from the insurance sector. It comes from the notion that you need a level playing field and that you are in the same market competing with each other. But pensions are different from insurance products. This should not be the real objective of any European regulation."
With the raft of European financial regulation - from Basel III to Solvency II - hitting financial market actors, surely pension funds cannot be immune from more regulation? They are, after all, a significant presence in financial markets?
Leppälä looks pensive.
"You could say in banking there has been a market failure, resulting in tremendous problems and systemic risk," he says. "But insurance as a whole was not in the same type of trouble. And pension funds, certainly not. There is no market failure in pension funds."
Britain is set to play a big role in lobbying the EC, Leppälä says, given its radical approach to retirement provision. "The UK, for many reasons, is really important for many countries. That's why I've tried to follow during the crisis what is happening in the UK.
"Companies who are sponsoring pension plans, if they close their DB schemes in important countries such as the UK, it doesn't automatically lead to the conclusion they would have to close DB in another country. But if you do it in the UK, it can have an effect on the perception of DB on a wider scale."
The 500-page consultation on the IORP Directive closes at the start of next of year, at the same time Leppälä takes over as secretary general of EFRP.
Let battle commence.
The currency union faces four possible growth scenarios
EUROPE - The majority of European multinational companies would like to develop cross-border pensions but differing regulations among member states and uncertainty over changing European rules are giving plan sponsors pause, AEGON finds.
EUROPE - Mercer has launched a service to help trustees and other institutional investors meet their stewardship requirements.
That the third quarter was turbulent was no surprise. But recently released funding figures for pension funds and asset under management figures for asset managers have helped us crystallise the cost of the uncertainty surrounding the future of the EU...
Pension funds could soon have to bear the cost of a Europe-wide tax on equity, bonds, currency and derivative transactions, finds Lynn Strongin Dodds