As rapporteur on women’s rights for April’s European Parliament response to the Commission’s communication on supplementary pensions, Astrid Lulling, a member of the Luxembourg Christian Democrat party, contributed considerably to the parliament’s final resolution. Her input, however, stretched far beyond the women’s rights remit, as she explains.
“Of course there are special problems for women - especially if they stop working and then return to work.
“There is also the problem of the implementation of equal pay principles. Wage discrimination makes women more dependent because they get lower pensions in the first pillar and then if there is no scheme in their company of work they lack the means of building up supplementary pensions.”
Conceding that this is also the case for many men, she notes: “What I want is the preservation of acquired rights and that periods spent bringing up children be credited for the purpose of calculating pensions. This was included in the parliament’s resolution.”
“In fact, there weren’t many of my proposals that were not included – indeed some men thought there were too many included!”
Lulling’s involvement in amending the Kuckelkorn report, which she says underwent considerable compromise, did not leave her entirely happy with the end result: “I don’t much like the report. But the most important thing now is to see what the Commission does in proposing the directive.”
Lulling says the parliament welcomed the directive’s intentions of developing a framework for a single market for pension funds, eliminating the obstacles of free choice, movement of persons and freedom to provide services and avoid double taxation.
“At the same time, we recognise that levels of tax relief remain matters for individual governments. This is very important and the directive should only have these objectives.”
The statement refers to the debate which reared up in the parliament over the coverage of biometric risk.
“One of my amendments said that systems without cover for biometric risk, which already exist in the European Union must not be jeopardised. We think that the people who offer pension funds must be free to offer different systems. If you want a product without biometric risk then this should be a person’s liberty.” Lulling says she believes there is a misunderstanding amongst many members of parliament who believe that all pensions must cover biometric risk. She notes: “In a country like Luxembourg, where for instance the first pillar covers this and I don’t need it, then I should be able to choose a pension fund where I pay less in fees. Why shouldn’t this choice exist?”
The final recommendation of the Kuckelkorn report contained the compromise proposal which stated that it was essential that a pension fund include cover for longevity through the purchase of an annuity and that pensions which cover other biometric risks are ‘desirable’.
Lulling comments that other difficult subjects to broach in parliament concerned prudent rules and security arrangements for supplementary pension funds. “I had an amendment saying that prudential rules must ensure funds are secure but that the rules must not be disproportionate to the objective and must be differentiated according to whether a scheme is internal or external to the sponsoring company.”
In essence, she explains this means only internally financed schemes such as the book reserve type should guarantee protection against insolvency. “External schemes already provide a guarantee of insolvency against the employer – we must make a difference and not impose on funds that already have these rules. Book reserve schemes have to provide a guarantee – because of the Maxwell case, you just cannot say they should do nothing.”
And she believes a distinction should also be made between prudential rules for pension funds and insurance companies. “Pension funds must have some rules, but concerning the way they invest we should not be too prescriptive as long as there is security.”
On fiscal procedure, Lulling believes the way forward is for contributions to be tax- deductible to a certain level – with a level playing field guaranteed. “This should be the case for both pension funds that cover biometric risk and those that don’t. There must not be fiscal discrimination here,” she says.
“However, it is up to different countries to decide to what level they make contributions deductible – you can’t make these things completely absurd.”
She believes the biometric debate is far from over: “We must see what the commission does about this. If they take what the socialists want, ie that all these schemes should cover biometric risk, then this would not be good for us because we want to see a more liberal approach with free choice. There are big differences in opinion, even in my own political group, between myself and say, the Dutch members, who have very low first pillar pensions and cannot live without the cover of biometric risk in the second pillar. It’s different from country to country and this is why I believe the commission should only make a framework and let it be free.”
Lulling states her belief that the first pillar should cover biometric risk, noting that if this is not the case then citizens of countries like Luxembourg would have to take more expensive supplementary pension with biometric cover they don’t need. “People should be able to opt for one scheme or another – that’s freedom. In the European Parliament though, there are many people who are too attached to regulation which the issue.”

Topics