European Chemical Industry Social Partners Conference April, 2013, Dublin

1. The contribution of occupational pensions to a sustainable pensions system from the employers’ perspective European Chemical Industry Social Partners Conference April, 2013, Dublin Stefanie Lomb

2. Who we are… BAVC = The German Federation of Chemical Employers’ Associations Wage and social policy 1.900 chemical companies 550.000 employees 11 regional member associations Large Section of Small and medium enterprises (SME) 2 2

3. Green Paper – White Paper – Directive on minimum standards – IORP Directive Starting point 3

4. Green Paper – White Paper – Directive on minimum standards – IORP Directive 7 July 2010 Green Paper: start public consultation 15 November 2010 end public consultation 16 February 2012 White Paper 1 March 2012 Public hearing IORP Directive 7 June 2012 hearing EMPL/ECON 6 December debate on draft reports “fight for competences” EMPL/ECON ECON: Solvency EMPL: Minimum standards European Commission: the driving force 4

5. Green Paper – White Paper – Directive on minimum standards – IORP Directive 26 february 2013 vote ECON (Rapporteur: Thomas Mann, EPP) 21 March 2013vote EMPL (Rapporteur: RiaOomen-Ruijten, EPP) April vote plenary 2012/2013/2014: Revision Directive on minimum standards and IORP Directive? European Commission: the driving force 5

6. 30 March 2011Call for Advice COM to EIOPA 2nd half of 2011 public EIOPA consultations 15 February 2012 Advice EIOPA to COM 15 June 2012 Start public consultation on “technical specifications” for a quantitative impact assessment (QIS) “Holistic Balance Sheet” approach which follows a Solvency II logic 31 July 2012 end public consultation 2 October 2012 EIOPA sends “draft technical specifications” to COM 16 October 2012 Start QIS 17 December 2012 end QIS Spring 2013 QIS report EIOPA to COM EIOPA: advisor 6

7. What is at stake? Commission’s view on occupational pensions: financial products that should freely circulate in the internal market Solvency II as a basis for regulating institutions for occupational retirement provision (IORPs); “level playing field” Solvency II-like regulation would overstrain IORPs financially (2nd pillar of the pension system) Initiatives already announced: revision IORP Directive (summer 2013), directive on the acquisition and preservation of supplementary pension rights (2013) 7 7

8. Solvency II: Neither „goodstartingpoint“ nor „benchmark“ IORPS versus financialproducts: Socialinstitutionswith a non-for-profitapproach Employerbackedpensionsystems Highlycustomizedandefficient: highcoverageandlowcosts IORPs differconsiderablyfrom financialproducts Involvementofemployees in supervisoryboards Collective elements Longterminvestments 8 8

9. The conceptofoccupationalpensionschemes • Occupational pension schemes vs. individual pension products of the financial markets: • Occupational pensions are employer-backed pension concepts • Long-term benefit plans and collective elements, no extensive options for the beneficiaries • No third party interests • Safeguarding of employee and employer interests at the level of labour law • Employers and employees are represented on the bodies of the pension funds to guarantee interests

10. The employers‘ view • Improvement of Retirement age and statutory pension systems • Careful distinction between the different pillars of the pension system – statutory, occupational and individual pension schemes • Principle of subsidiaritymust be observed: reformsare up to Member States • More effective to convince people to work longer on a voluntary basis and develop flexible working time models • Long term pension reforms are better than several reforms that lead to uncertainty among the employees (and at least employers)

11. The employers‘ view • Improvement of Occupational Pension Systems • Institutions for Occupational Retirement Provision (IORPs) are social institutions organised by the employers and employees (non-profit-organisations) • IORPs do not sell any financial market products traded on the free market. Occupational pension schemes do not cross borders. There is no market for cross-border products of social institutions and no added value compared to existing systems in view of the manifold interfaces to national tax and social security systems. • A pan-European “level playing field” is neither required nor does it make sense.

12. The employers‘ view • Occupational pension schemes are a proven, reliable pillar of the pension system which corresponds to the objectives in terms of sustainability, safety, portability, and information • Additional regulation of occupational pension schemes would overstrain the institutions and carriers of occupational pension schemes financially - however money must be invested permanently f.e. in research and development to maintain the company’s innovative strength in an competition pressure environment • Moreover additional regulation would only increase bureaucracy and costs and would jeopardize the willingness of employers to offer (higher) occupational pensions on a voluntary basis

13. Effectsof additional regulations IORPs Financial burdensandoverstrain becauseofincreasingcapitalrequirements Beneficiaries Lowerfuturebenefits, becauseemployerscannotaffordtoincreaseitscosts, -> lessefficientandattractive Employers Financial burdensand competitivedisadvantages, ifcapitalhastobesetasideforsafetypurposesandcannotbeinvestedforinnovationsandgrowth 13

14. The formationofalliancesisimportant The promising approach: socialpartnership Common positionpaper ECEG (European Chemical Employers Group) und EMCEF (European Mine, Chemical andEnergyWorkers‘ Federation) (January 2011) Common positionpaper BAVC und IG BCE (October, 2011) 14 14

15. Common positionpaper (September 2012) 15 15

16. Ourtargets • No additional regulations, especially solvency II based (HBS approach or similar models) • The social partners should be given more weight in the consultation process, because the subject of the consultation clearly concerns the “social policy field” • Occupational pension schemes negotiated by the social partners provide the best guarantee for people to receive an adequate pension • Tailor-made solutions should be carefully developed via social dialogue - Indeed, a clearer role for social partners is required

17. What’s next? Initiatives to be expected: Parliament and Council will be decisive – and the social partners! 17 17

18. Thanks a lotforyourattention! Bundesarbeitgeberverband Chemie e.V. Abraham-Lincoln-Straße 24 65189 Wiesbaden Telefon +49 611 77881- 0 Fax +49 611 77881- 23 info@bavc.de www.bavc.de 18