The design of European supervision of pension funds
Within the European Union there is a large variety of old age income support systems. Many member states have a mixture of state provisions, occupational pensions and individual pension savings. However, the relative importance of and the interaction between these three pension pillars differs significantly from one country to another. In this paper we focus on the second pillar, that of employment-based pensions. The primary function of occupational pension schemes is to provide employees with a retirement income. There are many ways in which these occupational pensions can be organized. The key differences relate to the way such pensions are financed, whether the pension promise contains any guarantee, the way the guarantee is secured, and the level of risk sharing among stakeholders. The key purpose of this paper is to explore the optimal design of European supervision of occupational pension funds, given the wide variety of pension schemes. Supervision on these occupational pensions is carried out by national supervisory bodies, using regulatory frameworks that may differ by member state, as seen fit for each specific situation.