| Only nine Member States have implemented the Pension Directive |
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| 09/10/2005 | |
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The deadline is now passed and that's a fact: only 9 Member States have taken all the necessary measures to incorporate the Pension Directive (also known as the Institutions for Occupational Retirement Provision or IORP) into their national legislation. And that might still be a somewhat rosy picture according to Jaap Maassen, the Chairman of the European Federation of Retirement Provision (EFRP): "Six notifications are incomplete and notification alone is no guarantee of correct implementation." Not only concerned about the delay in the implementation of the Directive, the EFRP also highlights the non-prescriptive nature of the directive, "that leaves much open to Member States to decide for themselves." The EFRP stresses that even if much of the transposition is left to the interpretation of the Member State, this "may not be confused with a lack of legal clarity providing excuse for delay or, even worse, divergent transposition." Jaap Maassen welcomes the European Commission's decision to hold a meeting in 2006 to look at some of the issues that have so far proved problematic in the implementation of the directive. By then, thinks Charlie McCreevy, the European Commissioner for internal markets and services, all Member States should have implemented the Directive. "The potential benefits of the Directive are enormous. I therefore intend to monitor very closely its implementation in Member States", said Mr McCreevy at a meeting of the Irish Association of Pension Funds. The European Commission has already organised two meetings with Member States in the last year to look at some issues that could lead to diverging interpretations. Sticky points The Commissioner highlighted the issue of the prudent person principle, which could be hijacked by some national legislation. As long-term investor, pension funds should invest more in long term risk capital such as equities and even venture capital markets, he said, even though fixed-income might seem a more prudent investment at first glance. However, he reported "signals" indicating more investments in fixed-income. "I am concerned national legislation forces pension funds to re-allocated investments, thereby possibly hampering the working of the Directive", he said. The Pension Directive should lead many multinational companies to consolidate their pension funds in a single country and to operate as a truly pan-European pension fund. Under the directive, the approval of only one regulator will be sufficient for a cross-border pension fund to operate under the principle of mutual recognition. The European Federation for Retirement Provision estimates that the total effect on a yearly basis of improved return, as a result of combined scheme operations and more investment freedom thanks to the UCITS, could be close to EUR 10 billion. Mr McCreevy pointed out that some Member States might be inclined to restrict the scope of the Pension Directive on the grounds of their social and labour laws. "However the Directive intends to create an internal market for pension funds and it is my responsibility to make sure that we succeed in our objective", he said. "I will therefore not accept that Member States abuse the requirement for pension funds to comply with host Member State social and labour law in order to protect their pension market." The European Commissioner also said that there had been some improvement with regard to tax deductions on pension contributions to institutions established in other Member States. All obstacles to these deductions have already been lifted in Ireland, Germany, Luxemburg, the Netherlands, Austria, Portugal and Finland, while Belgium, Spain, France, and the UK are about to eliminate them. At this time, only Denmark has been brought to the European Court of Justice for leaving those obstacles in place. J.L. |
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Articles of the same Topic : Pension funds Western Europe
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