Pensions reform in the European Union: Recent developments after the implementation of the IORP directive
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Marshall, J. and Butterworth, S. (2000) Pensions reform in the EU: The unexploded time bomb in the single market. Common Market Law Review 37: 739–762.
See for an understanding of these concepts, CEIOPS (2008) Survey on fully funded, technical provisions and security mechanisms in the European occupational pension sector, March.
According to the EFRP (2005): EFRP response to the European Commission Green Paper confronting demographic change www.efrp.org .
European Commission, COM (2000), p. 507.
That is before the credit crunch had its impact, see infra, para 4.
For an overview of the developments and EU-initiatives until 2000, supra, note 1.
This was one outcome of the 6th European Pension Debate, organised by the University of Tilburg (2009), the Netherlands, April, www.uvt.nl/ccp/epd .
O.J. 2003, L 235/1.
Although in 2006 the Commission send reasoned opinions to Belgium, Cyprus, the Czech Republic, Finland, France, Italy, Lithuania, Slovakia, Slovenia, Spain and the United Kingdom for not having written the Directive into their national laws, or for having done so only partially.
Italy, United Kingdom and the Czech Republic.
This issue was not a ‘key aspect’ as defined by CEIOPS, but was a difficult ‘nut to crack’ for the Dutch government during the implementation of the IORP Directive.
The other key aspects, as defined by CEIOPS, are the following: exemptions for small institutions, information to be provided to members and beneficiaries, reporting requirements, ‘fully funded’ and the calculation of technical provisions, insolvency protection institutions, subordinated loans, investment regulations and custodianship. See: CEIOPS (2008) Initial review of key aspects of the implementation of the IORP Directive, March.
Supra, note 3. The reality is more diverse. Some pension funds only partially underwrite the liabilities themselves, together with the plan sponsor and/or the employees.
See: EFAMA (2008) Defined-contribution pension schemes, Risks and advantages for occupational retirement provision, www.efama.com .
Clark, G.L. (2000) Pension Systems: A Comparative Perspective. Oxford: Oxford University Press.
‘Explanatory Memorandum’ of the Dutch PPI Act, Dutch Acts of Parliament (‘Kamerstukken’), nr. 31891, 3, 2008–2009.
In the case of the United Kingdom: ‘incorporated companies limited by shares or by guarantee or unlimited’, ‘societies registered under the Industrial and Provident Societies Acts’, ‘societies registered or incorporated under the Friendly Societies Acts’, ‘the association of underwriters known as Lloyd's’.
CEIOPS is the Committee of European Insurance and Occupational Pensions Supervisors. It was established under the terms of the European Commission Decision 2004/6/EC of 5 November 2003 and is composed of high level representatives from the insurance and occupational pensions supervisory authorities of the European Union's Member States. The authorities of the Member States of the European Economic Area also participate in CEIOPS.
COM (2008), p. 119.
Dutch Acts of Parliament (‘Kamerstukken II’), 2004–2005, 30 104, nr. 3, p. 7.
Arnot, S. (2004) Legal Commentary on the Pension Funds Directive [dir. 2003/41/EC]. EFRP.
Article 3 (operation of first and second pillar); Articles 4 and 7, (separation from insurance business); Article 16(3) (supporting the full funding requirement for cross-border schemes); Article 18(7) (application of specific investment rules in the event of cross-border) and Article 21(5) (request from host state to home state for ring fencing).
Wet van 19 januari 2006, houdende wijziging van de Pensioen- en spaarfondsenwet en enige andere wetten in verband met de implementatie van richtlijn nr. 2003/41/EG van het Europees Parlement en de Raad van de Europese Unie van 3 juni 2003 betreffende de werkzaamheden van en het toezicht op instellingen voor bedrijfspensioenvoorziening (PbEG L 235/10).
At the time of writing of this article, not yet in force. See: www.minfin.nl .
Cases C- 67/96, Albany, C-180–184/98, Pavlov.
To the extent that national measures must be in conformity with the Treaty (for example Article 10 EC, loyal cooperation) and that Member States may not misuse EC law. In other words: ‘There is no nucleus of sovereignty that Member States can invoke as such against the Community’. See: Lenaerts, K. (1990) Constitutionalism and the many faces of federalism. American Journal of Comparative law, 38.
Article 6(j) of the Directive, the definition of ‘host Member State’, O.J. 2003, L235/10.
Case C-210/06, Cartesio (opinion).
Although, surprisingly, the Court held in its judgment (C-210/06, Cartesio) that Articles 43 EC and 48 EC are to be interpreted as not precluding legislation of a Member State under which a company incorporated under the law of that Member State may not transfer its seat to another Member State while retaining its status as a company governed by the law of the Member State of incorporation. This judgment stands in clear opposition to the opinion of the Advocate General.
For example, case C-210/04, FCE.
‘A branch is a place of business which forms a legally dependent part of an insurance undertaking.’ See: ‘Commission interpretative communication, Freedom to provide services and the general good in the insurance sector’ (O.J. 2000, C 43).
See also Article 1 of the ‘Investment Services Directive’, Directive 93/22/EEC, O.J. 1993, L 141.
Rome (1980). The treaty is replaced by the Rome I-regulation, which will be applicable from December 2009. Regulation 593/2008, O.J. 2008, L177.
Article 6(i) IORP-Directive, O.J. 2003, L235/10.
Directive 2006/48/EC (O.J. 2006, L 177/1).
Solvency II, supra, note 20.
Advocate-General Darmon wrote in point 3 of its conclusion in the case of Daily Mail: ‘Establishment means integration into a national economy. Thus, it is not contested that establishment within the meaning of the Treaty involves two factors: physical location and the exercise of an economic activity, both, if not on a permanent basis, at least on a durable one.’ See: Case 81/87, Daily Mail, (opinion).
See also Article 1 of the ‘Investment Services Directive’, Directive 93/22/EEC, O.J. 1993, L 141. Ferrarini, G. (1994) Towards a European law of investment services and institutions. CMLRev 31.
Case 205/84, Commission v Germany.
Case C-94/55, Gebhard.
The Gebhard case.
See: ‘Freedom to provide services and general good’, Interpretative Communication, op.cit, note 40.
Van Meerten, H. et al (2008) National report of the Netherlands on the new services directive. In: H.F. Koeck and M. Karollus (eds.) The New Services Directive of the European Union, Report for, Linz, Austria: FIDE XXIII Congress.
See: ‘Freedom to provide services and general good’, Interpretative Communication, op. cit.
See also the European Commission (2005) Working document for the meeting on the transposition of the IORP Directive, Meeting on 19 April 2005 (MARKT/2510/05-EN Or.).
Titled: ‘Benefit & Compensation Plans Around the World’. See: www.mercer.com .
Into its financial legislation, the ‘Wet op het financieel toezicht’, pp. 1–30.
Because the premium pension institution (PPI) explicitly is not a pension fund in which social partners operate a pension scheme solely for their own circle of solidarity, the same requirements do not have to apply to the PPI that apply to pension funds. The PPI does not, for instance, need to have a joint board. The similarities with a so-called UCITS (Undertakings for collective investment in transferable securities, see Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (OJ EC L375), can furthermore be mentioned. It is unmistakable that there are similarities between an IORP and a UCITS. It is not for nothing that Article 2(2), under c of the IORP Directive stipulates that it does not apply to UCITS. The European legislator found that these institutions differ by nature. The PPI has in common with a UCIT that that both institutions do not bear underwriting risks. The IORP Directive allows room for this. For the Directive makes a difference between so-called Article 17 IORPs (which are IORPs that do insure) and non-Article 17 IORPs.
Belgium Law of 27 October 2006 on the supervision of institutions for occupational retirement provision.
However, initially the solvency requirements remained unclear.
See also the website: www.invest.belgium.be .
Article 2(10) of the Directive.
See also the website: www.lff.lu , (‘Luxembourg for Finance’).
For example, Investment & Pensions Europe headlined that ‘Two Dutch schemes to move to Mercer pan-European vehicle’. This Irish pension vehicle is a master trust, which can be joined by more than one employer. An advisor claimed: ‘Its centralised structure will lead to lower operational costs, increased efficiency and better governance.’ See: www.ipe.com , 15 October 2007.
Article 118e (3) of the German Insurance Supervision Law (‘Versicherungsaufsichtsgesetz’, VAG).
Rhiel, R. (2005) Pension Funding in Germany. Mercer publications, www.mercer.com .
Regulation (EEC) No 1408/71 (O.J. 1971, L149/2).
The State Earnings Related Pensions Scheme, SERPS.
Which has been replaced meanwhile by Regulation 883/2004 (O.J. 2004, L160/1).
‘Privately managed funded pension provision and their contribution to adequate and sustainable pensions’, SPC, 2008.
O.J. 1979, L6/24.
O.J. 1986, L225/40.
O.J. 1998, L209/46.
COM (2005), p. 507.
COM (2007), p. 603.
Ref: Ares (08) 14767, http://ec.europa.eu , accessed 3 September 2008.
Supra, para 2.2.
Investment & Pensions Europe. (2008) ÖPAG halts cross-border plans, 16 September.
CEIOPS, 2008 Report on Market Developments. CEIOPS’ first report on market developments was published in 2007. This 2008 update covers the period of 18 months to June 2008 and shows a 46 per cent increase in the number of IORPs operating cross-border.
A survey of 100 pension schemes, performed by The National Association of Pension Funds (NAPF) showed that between July 2008 and January 2009 the number of employers with open DB schemes expecting to switch new employees to defined contribution (DC) schemes more than doubled from 21 to 45 per cent. See:NAPF. (2009) Pension provision and the economic crisis, www.napf.co.uk .
For more detail: OECD. (2008) Pension markets in focus: Special Feature: Private Pensions and the 2008 Turmoil in Financial Markets’, December, Issue 5.