EUROPE DIRECTIVE SPECIAL – The European Monetary Affairs Committee (EMAC) has voted unanimously to adopt the Karas report on the occupational pensions directive by 22 votes in favour to six against.

The key vote means that the pensions directive remains virtually intact following Austrian MEP Karas’ review and now goes forward to a Plenary of the European Parliament at the beginning of July, where it is expected to be ratified.

Significantly, the decision strengthens the shift towards the prudent man investment principle for European pension funds.
It also knocks back proposed amendments from the European Socialist Party for obligatory coverage of biometric risk in pension plans.

At today’s (June 19) controversial hearing at the European Parliament large sections of the European Socialist Party abstained, according to Finnish MEP, Piia-Noora Kauppi, a member of the European Peoples Party.
“ The result was that there were 39 voting, 22 voted in favour, 6 against and 11 abstentions.
“ The eleven were probably the Socialists.”
“ It was a compromise with the liberals.
“ The very necessary option of biometric risk is now the model proposed by Mr Karas, so there will be no obligatory coverage.
“ On longevity the form says that “usually” lifelong payments have to be there, but it says ‘usually’ – it is not exhaustive, so there might be other possibilities like lumps sums or whatever.”

Kauppi adds that on taxation, one of the compromises was an encouragement to the Ecofin Council of Ministers to make a proposal on the EET (exempt, exempt, taxed) model.

“ I’m quite happy. I’m not fully happy because it was a compromise. Some amendments, which I would have rejected, were in the compromise. For example, there is the remark that basic decisions in pension schemes in the second pillar have to be made collectively. “ Of course, I think that basic decisions can be made collectively, but what is a basic decision? For example, is the coverage of biometric risk a basic decision? Because I think that it should be done individually,” she notes.