'Jigsaw pieces in place'
If the European Court of Justice follows the opinion of the advocate general in the Danner v Finland case on pensions taxation, this would be the first attempt made to abolish all obstacle relating to pensions tax issues. This view was expressed by Leonardo Sforza of consultants Hewitt Associates at a seminar ‘Towards pan-European pensions’ last month in Brussels, which the consultants organised in co-operation with the European Economic and Social Committee (EESC). “Because of the power of an ECJ judgement this can be immediately enforceable in each of the member states,” he said.
Looking at the progress being made by the pensions directive, he said the past six moths had been difficult in this regard. The Barcelona meeting in April of EU heads of governments made the commitment that the pensions measure be adopted as a priority by the end of the year. He also pointed to the work of the representative European Pensions Forum, whose voice was another that was being listened to in this field by the European institutions in addition to the “main actors”.
The main pieces of the jigsaw puzzle were in place to complete pensions picture in the EU, he believed.
“If we are serious about making progress towards the single market, then we must make progress on pensions,” said Harry Byrne of the EESC, who acted as a rapporteur for the committee’s report on the pension arena. “We are protecting the rights of workers and the mobility of workers.” But he also pointed to the needs of European companies, which need to be competitive. Referring to the the moves on the tax side, he noted that the legal judgements often depend on the circumstances of the particular case. “Tax relief is an essential aspect from a pensions cost point of view.”
The European Trade Union Confederation was in favour of the single market and particularly for cross border pensions arrangements, said Beatrice Hertogs of the ETUC in Brussels. “We need a framework for the guaranteeing of pension rights.”
“We regret that the EC does not endorse two recommendations of the European Parliament, that of biometric risks – longevity and surviving persons – and the involvement of the social partners in the control of the investment strategy of pension funds.”
At a national level if they wanted to move to a more funded system, the involvement of the social partners in the control of investments must be considered, she said. “In Germany the trade unions accepted this. We want to be involved in the control of the strategies of the pension funds.” In the final analysis, she said, the question was one of workers pensions.
There should be a trade off beween obtaining trade unionagreement for the single market in pensions, with involvement in the control on the investment side.
EU member states have come closer together in recent months in their positions about the EC’s proposed pensions directive, said Jean-Yves Muyelle of the commission. “However, there is not as yet agreement among them,” he added. He paid tribute to the progress made on the directive under the Spanish presidency.
“Before, the Swedes tried but did not get agreement between the members,” he said. Under the Belgian presidency there was no progress.
“But, it is not going to be completed in the next six months,” he warned, referring to all that would have to be put in place once the Council of Ministers reached agreement.
He was hopeful that the Danish presidency, which follows the Spanish, would help the directive.
Muyelle pointed out how the position of member states on the issue of prudential supervision had changed. Originally there had been contrasting views on what this had meant.
“This process has been an educational one. At one point we realised how German attitudes had changed completely on prudent man over a 12-month period. So let us be optimistic about the directive,” he said.
Muyelle was responding to a comment and question from Withold Galinat of the German chemical company BASF, who said there seemed to be “a fair chance” the directive would not happen, adding “what happens if the directive does not come through, as Europe’s international companies need it desperately?”
Joachim Melgarejo, a member of the Spanish delegation to the pensions working group, said: “We will have to fight for more “rapprochement” among member states.”