As the pensions portability issue is expected to continue very much behind closed doors in the EU Council of Ministers in Brussels, at least until late May, two bodies are to open matters up by staging a public conference. The organisers represent the pension rights of around 55m EU citizens, or approaching 10% of the entire 493m population total head count.

The ‘Portability, Threat or an Instrument to Promote Mobility’ meeting, which aims to concentrate on technical aspects of portability, will take place in Brussels on 18 April. The joint organisers have activities that cover both social protection and pensions issues. They are the European Association of Paritarian Institutions of Social Protection (AEIP) and the European Association of Public Sector Pension Institutions (EAPSPI).

The AEIP, which is based in Brussels, brings together employers and employees on social protection issues. It has 25 member institutions in 16 European countries. Its members active in the area of retirement and pensions cover pension rights of about 35m people drawing

The body lobbies the European Commission, the European Parliament and the economic and social affairs committee.

AEIP promotes paritarian management of social protection. The word paritarian in its title derives from the French parité, meaning equality. In this case this implies balanced management of social protection institutions.

Munich-based EAPSPI, which represents 21 institutions in the EU, covers pension rights for 26m pensioners and employees of the public sector in Europe.

It provides a forum for issues concerning retirement in the public sector and over other technical and management aspects of pensions. Subjects to be covered at the conference will include the crucial matter of fiscal rules, pointing up the vexed question of whether all obstacles been removed, or not. It will include discussion on the impacts of cross-border transfers of occupational rights. The conference will also include a study on the pension rights in the construction sector
in nine EU countries, by Professor Yves Jorens, of Gent University.

Meanwhile, strong positions have emerged from the Confederation of Business Europe (CBE), formerly UNICE, which represents European employers’ interests, and from AmCham EU, the Brussels-based voice of companies of US parentage.

Both bodies have come out with objections to the portability directive. While taking the common view that something has to be done to enhance the needs of employees’ mobility, the US-orientated lobby group blames lack of mobility of European employees on many factors. It pinned most censure on tax obstacles. In a recent position paper, AmChamEU notes that total US investment in Europe amounts to €800bn, and currently supports over 3.6m jobs.

It also presents some nightmarish examples of obstruction by EU member governments. They have often erected tax barriers that seriously hampered cross-border portability of pensions, wrote AmCham EU.

In addition, tax problems have arisen due to a lack of co-ordination between the governments, it continued. A clear example is the widespread practice of not recognising pension plans of other EU member countries as “qualified plans”. AmCham EU said that it had serious doubts that labour mobility could ever be improved as long as employers’ contributions into foreign pension plans might be counted in as employees’ taxable income by some governments.

It had similar qualms about contributions paid to foreign pension plans not being tax deductible for companies. These issues were not addressed in the draft directive, it said. The lobby group concluded that the proposed directive would increase the costs of labour for the approximately 120m workers covered by supplementary pensions.

Additional costs would fall on both employers and on employees. AmCham EU was now seeking a full “impact assessment” of the present version of the draft portability directive.

Another critic of the current draft is the CBE. This office wants to see modifications to ensure a better balance between costs for pension sponsors and benefits in terms of mobility.

It was Steven D’Haeseleer, CBE’s social affairs adviser - who is expected to attend the April conference - who suggested that voluntary instruments would be the practical way to solve transferability.


he issue of occupational pensions and Solvency II, the proposed insurance directive, came up last June, when Henrik Bjerre-Nielsen, chair of the committee of European Insurance and Occupations Pensions Supervisors, noted that occupational pensions schemes were not part of the new Solvency II rules. (A draft of the insurance capital adequacy directive is due to appear this summer.)

Speaking at a meeting of the European Federation for Retirement Provisions (EFRP), Bjerre-Nielsen said that he had anticipated that occupational pensions funds would be covered by Solvency II-like requirements.

Bjerre-Nielsen added that if they were not, “politicians may need to explain to the beneficiaries from occupational pension funds why they should accept a potentially higher expected shortfall than policy-holders in insurance companies”.

In fact, the Commission position is firmly against including pension provisions in its summer’s draft of Solvency II. However, the AEIP and the EAPSPI may be preparing a position on this matter.

Also, in 2008 an expected revision of the occupational pensions directive (IORP), which puts in place minimum standards to facilitate cross-border operation by pension schemes, may tackle the issue of portability within Solvency II.

Against a range of complex opinions, one might guess that current wrangling, behind closed doors in the Council in Brussels, is bound to be bare-knuckled.

But even if the EU institutions do reach consensus, any new version of the pensions portability directive may permit up to a 10-year phasing- in period. Add to that the past 20 years fumbling to reach the present incomplete stage, and you get a 30 year sclerotic spread.