After a pre-Summer flurry of activity on the European pensions front with the swift passage of the occupational pensions directive through the Parliament followed by the prompt engagement of the Commission over potential problems with the Parliament resolution, all eyes were on the October 16 meeting of the Council of Economics and Finance Ministers (ECOFIN) in Luxembourg to begin giving the final direction to more than 10 years of fraught negotiation.
In time-honoured European fashion, the result was less than spectacular – perhaps no surprise to hardened Europe watchers.
In a brief session squeezed between debates on money laundering and banking regulations after the September 11 terrorist attacks in the US, ECOFIN gave little more than five minutes to the question of the European pensions directive.
The timing obviously didn’t help, but the result was that Europe’s finance ministers made scant headway in finding a solution on the pan-European pension funds question.
In the short space of time it devoted to pensions, the ECOFIN council, presided over by Didier Reynders, the Belgian finance minister, took note of the ‘progress’ being made on work for the IORP principle (Institutes for Occupational Retirement Provision), but added very little.
The Council pointed out that a first reading of the first half of the directive (up to and including article 11) had been finished and that a methodology had been adopted within working groups in order to complete the reading of the remaining articles.
The latter concern more specifically the rules to be applied concerning the calculation of technical provisions and investment as well as cross-border affiliation.
The Council also remarked that a questionnaire relative to the control of IORPs had been sent to member states on September 3, with the aim of creating greater mutual understanding of member state regulations for pensions to which IORPs will have to adhere. It added that the responses were currently being analysed.
A spokesperson at the European Council declared that there had been a certain degree of frustration at the meeting over the lack of progress in the area.
“One of the key questions is still whether this should be a matter for the European Commission or for member states to decide.”
He noted that the meeting had given little more than “five minutes” to discussion on the pensions question.
A disappointed Othmar Karas, the European Parliament rapporteur for the pensions directive, gave his view that expectations for the ECOFIN meeting had been sharply deflated, pointing out that “nothing had been done”.
Referring to the questionnaires cited by the Council as part of the work in progress, he added that they gave little information that wasn’t already known.
“There is nothing new here. We think that it was just a bit of a time delay to prolong the debate.”
“It seems that the results of the questionnaires will only be available to working groups and that there will not be any decision taken until the Spanish take over the presidency of the EU.”
Karas says the Parliament is now planning to directly question the Council at the next plenary where pensions will be on the agenda - starting on November 12. “We will ask the Council why it is not moving this issue forward.
“We will ask how they can be credible because they know that pension schemes are a very important part of the Lisbon action plan.“We are going to stress this to them and ask how they are going to address this.”
Karas added that the Parliament had the support of EC Commissioner Frits Bolkestein over the delays.
He adds that the Parliament is also “thinking aloud” about ways of applying more political pressure on the Council and may attempt to lay down a table of deadlines for all the interested parties to reach decisions within the next six weeks.
“We want to have a period where the institutions have to work on this, because in regards to the Lamfalussy agreement we have to have something, otherwise the rights of the Parliament will have decreased on this matter and our endeavours are fruitless.”
Commissioner Bolkestein had expressed his ‘deep concern’ to the European Council at the Luxembourg meeting about the lack of priority given to the proposed European directive on occupational pension funds presented by the Commission a year ago, by warning that it was going ‘nowhere fast’.
He reminded ministers that the directive had been specifically identified as a ‘high priority’ by 1999’s Lisbon European Council meeting and attempted to outline the urgency for a decision:
“The European Parliament has already adopted its opinion, but in the Council of Ministers, the proposal appears to be going nowhere fast. Without this directive, Europe’s future pensioners run a greater risk of getting a raw deal.”
Bolkestein pointed out to Council ministers that the proposal would ensure a high level of protection for the rights of future pensioners while ensuring that institutions enjoyed sufficient freedom to develop an effective investment policy.
Nonetheless, the Commissioner welcomed the adoption of conclusions by the Council on tackling tax obstacles to membership of an occupational pension scheme in another Member State.
The Council did at least agree to hold consultations on the automatic exchange of information on occupational pensions under the auspices of the Mutual Assistance in Tax Matters Directive.
It also underlined the need to deal with the double taxation and double non-taxation resulting from mismatches between Member States’ systems for the taxation of occupational pensions.
The Commissioner also announced that he himself had sent letters to all member states enquiring about their national systems for pension taxation as a follow-up to the Commission communication of April 2001.
On the basis of member states’ replies, he said, the Commission would decide what further action to take.
Bolkestein also underlined that he preferred to solve taxation issues in direct contact with the Member States concerned, and that taking Member States to the European Court of Justice would only be a method of last resort.
We find ourselves in familiar territory then with the European pensions directive: waiting to see if the next meeting can be made to produce better results than the last!