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Introduction (partial) "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. The European Commission has put forward the aspiration to further harmonize supervision on a European level. The Commission has issued a call for advice (Commission 2011) asking the European Insurance and Occupational Pensions Authority (EIOPA) on how to achieve this goal. Given the abovementioned differences, harmonization will prove to be a challenge, and it may even impact the way pension schemes are designed. EIOPA has developed the concept of a ‘holistic balance sheet approach’ as the way to achieve as much harmonization as possible (EIOPA 2011). There are still many complexities that need to be addressed before harmonization can be achieved using the holistic balance sheet approach. In addition to a single harmonized framework for all different occupational pension systems throughout the European Union, we propose a supervisory framework that is consistent in the methods and instruments used, but that is still tailored to the specific characteristics of each individual pension system. We propose a method of clustering pension schemes along three dimensions, and we discuss the various supervisory instruments that can be used for each cluster in order to achieve the goals of supervision in a consistent manner. A harmonized regulatory framework at a European level will be implemented through legislation in each member state. This raises the question of how much freedom is left for individual countries to shape the regulatory framework and how to tailor it to specific situations. This is the subject of further study."

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