opes that the EU draft directive on pension mobility would emerge agreed by the Council of Ministers in mid-February are being disappointed. Even with the removal of the transferability element from the legislation at EU level, a new timing for agreement has had to be set, now scheduled for the end of May. The Council now has more time for behind-the-scenes discussions on the so-called "Finnish" compromise wording, as sent in by the European Parliament's employment and social affairs committee.

Meanwhile, a position paper issued late last year by AmCham EU - the Brussels-based voice of companies of US parentage - adds to the clamour opposing the proposed pan-EU legislation. While taking the common view that something has to be done to enhance the needs of employees' mobility, the lobby group pinned blame for lack of mobility of European employees on "many factors". Tax obstacles, it stated, were the largest.

In its paper, the body, which represents many international companies with sites spread across Europe, spells out some nightmarish obstructions by EU member governments. They often erected tax barriers that seriously hampered cross-border portability of pensions. In addition, tax problems arose due to a lack of co-ordination between the governments. A clear example was the widespread practice of not recognising pension plans of other EU member countries as "qualified plans" under their national legislation.

As a result, there continued to be a lack of cross-border recognition when employers' contributions into foreign pension plans might be considered as taxable income in the hands of the employees, or when contributions paid to foreign plans were not tax deductible for companies.

However, AmCham EU stated that it had serious doubts that labour mobility could be improved when employers' contributions into foreign pension plans might be considered as taxable income in the hands of the employees, or when these contributions paid to foreign pension plans are not tax deductible for companies.

This issue was not addressed in the draft directive, it wrote, concluding that the proposed directive will increase the costs of labour for around 120m workers affiliated to supplementary pensions with no evidence that it will reduce mobility. The impact of these additional costs would be on employers and on employees themselves.

AmCham EU therefore recommended that a full impact assessment be made of the [current] proposals. Even if the EU governments do reach agreement, at the end of May, the new version of the directive may be given phasing-in period of up to 10 years for adjusting scheme rules to the new harmonised requirements.


A fund processing ‘passport' for relevant information on trades in investment (mutual) funds across Europe has been published by the European Fund and Asset Management Association (EFAMA) to provide a standardised format for notifying such trades. The move should speed the upgrade of communication, which in some countries can still involve fax and email messaging, that can be tedious, time consuming and can lead to errors.

EFAMA's Fund Processing Passport (FPP) provides a short, single, fully harmonised document with all the key operational information that fund promoters should provide on their investment funds, at class level, in order to facilitate their trading. The information required includes ISIN code, contact details, subscriptions/redemption rules, settlement details, cut off times, and so on. Volume sales of unit trusts, known as mutual funds in US English, across European national boundaries are large and growing.

In 2005 the figure reached €386bn. In the US, clearing is carried out by the National Securities Clearing Corporation, a single, central body supplying to trade in funds, and also the market in bonds and equities. Such a set-up for the EU is not feasible, because of the difference in national procedures across the EU zone.

Bernard Delbecque, director of economics and research at EFAMA, explained that the development of the EU single market has been putting pressure on the communication needs, which have become more complex. The sales by banks of third-party funds were adding complexity.

He noted that when traders complied with the FPP, it can be used across Europe regardless of the difference procedures. It will facilitate the use of ISO 20022 language used to format messages. "We are pushing for the ISO standard to be adopted as the single form for messaging, Delbecque said. And, down the road, the EFAMA was looking for more automation in communication.

EFAMA says it strongly believes in the coherent and uniform disclosure across Europe of the essential "operational features of investment funds. It believes the FPP will push down processing costs and enhance competitiveness of the European fund industry. It has provided a user guide on the passport. In late 2005 Matteo Perrotta, of UBS, complained at a SWIFT investment management forum that the different systems and standards in Europe were sometimes confusing. For clearance of trades in stocks and bonds, the European Commission has initiated a standard clearing and settlement procedure.

The European branch of the Institutional Shareholder Services (ISS), is
this year recommending that shareholders vote against the re-election of auditors or the ratification of their fees if the auditors' fees for the previous fiscal year are not disclosed and broken down into at least audit and non-audit fee. ISS provides proxy voting and corporate governance solutions to the institutional market.

Jean Nicolas Caprasse, managing director of ISS Europe/UK says: "We all agree that the independence of auditors is essential and should be guaranteed by check and balances - which can only be effective with good disclosure. This is why we believe disclosure may be the one area where legislation is necessary. In fact, to reflect growing market expectations, ISS has changed its voting policy in Europe this year."

Caprasse added that the organisation has communicated this higher disclosure requirement to all issuers. In this way, it is hoping for improved standards in the coming AGMs.


The 2007 work programme of Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) will include the preparation of advice on future implementing measures and supervisory standards, both in the field of insurance and occupational pension funds.

For CEIOPS, the preparation of the Solvency II is taking priority in the insurance sector. Also important for 2007 will be a strengthening of the supervisory convergence, involving international bodies for banking, capital market, insurance and pension supervision. For occupational pensions, CEIOPS envisages it will disclose regularly the figures on the development of cross-border pensions. Furthermore, it plans to watch implementation of the Occupational Retirement Provision Directive.

The EC reports that its Inter-institutional Monitoring Group is calling for "regulatory self restraint" at all levels in its second interim report on the "Lamfalussy process", the approach to upgrade regulation of EU financial services generally.

The group, which has a mandate to assess the progress and identify possible emerging bottlenecks in the Lamfalussy process, believes that the choice between directives and regulations, the legislative instruments, is not straightforward. It suggests some guiding principles be set to choose between the two. The group is also asking bystanders for their comment on progress of EU's financial services reform programme.

Due in by 26 March, the inputs will contribute to a final report, scheduled for the autumn.