European Commission imposes sanctions on Czech Republic over IORP Directive
EUROPE - The European Commission has brought sanctions against the Czech Republic for its failure to implement the IORP Directive.
The Commission has referred the case to the European Court of Justice, following a ruling in January 2010 that stated the country must implement the directive, having missed the initial 2005 deadline.
As a result of its non-compliance, the country has been ordered to pay a €5,000 a day fine between January last year and the conclusion of the current hearing in front of the ECJ.
An additional €22,000 a day fine will be imposed between the second court ruling's conclusion and the final implementation of the directive.
Chantal Hughes, spokeswoman for Michel Barnier, commissioner for internal market and services, condemned the country's failture.
"It is more than a year since the EU Court of Justice ruled the Czech Republic had failed to fully implement EU pension fund rules," she said.
"As the Czech law has still not been amended, the Commission has now asked the Court to impose financial sanctions.
"The Commission hopes the Czech authorities will amend their legislation to bring it fully into line with EU law."
The news comes a month after the Czech government agreed to introduce a second-pillar pension system, financed by diverting 3% of contributions away from its current pay-as-you-go system.
However, the proposals met fierce opposition following their announcement, with even government loyalists opposing them.
Some companies were concerned the proposals offered insufficient incentive for workers to join the new second pillar.
Austrian banking group Erste Group said that if too many savers stayed outside the second pillar, pressure could lead to savings being confiscated and reintegrated into the first pillar, mirroring the current situation in Hungary that has seen the private pension system used to address the country's budget shortfall.