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THE EUROPEAN COMMISSION recently announced two new initiatives on the subject of pensions. The first is a proposed new directive which seeks to widen the opportunities for investment by occupational pension funds whilst increasing pensioners' rights and making cross-border management of funds possible. The second initiative is an analysis of current and future pension provision in the light of Europe's rapidly ageing population. The proposed directive is not concerned with pensions as part of social protection (i.e. state pensions) for which the Commission says, 'organising social protection and pension schemes is a matter for the Member States alone'. However as occupational pensions 'cover about 25% of the [EU's] labour force and manage assets worth €2,300 billion' the Commission says the schemes must 'benefit fully from the advantages of the single market and the euro without being hampered by unnecessary restrictions'.
The proposal contains three sets of rules to uphold the principles of security and affordability: 1) strict prudential rules to protect benificiaries 2) investment rules for effective savings management and 3) rules enabling cross-border management. The first set of rules would subject occupational schemes to detailed rules of operation and insist that members and benificiaries be kept informed at all times. If financial guarantees are offered the scheme must hold its own funds. The investment rules seek to liberalise current restrictions and allow more investment in shares and risk capital. The Commission say that such investment could contribute to 'better financing of the economy and stronger growth in the Union'. The cross-border management rules, say the Commission, would save a typical multi-national about €40 million a year as they would allow one pension scheme to operate across all 15 EU countries instead of having a different one in each Member State as at present. The second initiative on pensions was made by Anna Diamantopoulou, the EU Commissioner for Employment and Social Affairs. It concerns the problem of sustaining the present level of pensions as the population in the Community ages. By 2040, Ms. Diamantopoulou stated, the ratio of pensioners to people of working of working age will double. This increase will carry the danger of destabilising public finances as more and more resources are devoted to pensions but, at the same time, it is necessary to maintain a decent level of provision.
The answer according to the Commissioner is to increase the number of people of working age who are actually employed in line with the labour market reforms in favour of flexibility which was a prominent subject at the recent Lisbon EU summit (see Issue 10). 'Removing barriers preventing older people and women from participating in the labour market will be vital to unlock society's full human and economic potential. Better mobility of labour within the EU is also critical in order to make sure that skills are located where they are needed', she went on. If the Lisbon targets on full employment and inclusion can be attained pension reform can be made both manageable and equitable, in the Commissioner's opinion. However immigration policy must also play its part as, on present birth rates, countries like Spain will need 12 million incomers by 2010 to maintain its present labour force.
So far Ms. Diamantopoulou has agreed a framework for co-operation between different European pension systems as a first contribution to the 'High Level Working Party on Social Protection' set up by the Lisbon summit. The proposal for the directive will now be transmitted to the Council of Ministers and the European Parliament for adoption under the co-decision procedure. It also forms part of a bigger framework, the Financial Services Action Plan which the summit wanted to achieve integration of financial markets by 2005.
The provisions of the proposed directive on institutions for occupational retirement provision
Article 2 defines the scope of the directive, it excludes state pensions and 'pay-as-you-go' schemes.
Article 6 defines the institutions covered which are employment-related and funded pension schemes.
Article 9 insists on supervision by a competent authority and prior authorisation for cross-border activity.
Article 12 stipulates that the scheme's investment policy must be disclosed to the authorities every 3 years
Article 14 gives powers to the competent authority to intervene in schemes to protect the interests of members, including on-site inspections
Article 20 enshrines the principle of freedom for cross-border activity and a mechanism for co-operation between authorities in different countries.
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The proposed directive is available on the Internet at: |
http://europa.eu.int/smartapi/cgi/sga_doc?smartapi!celexapi! |
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'Adobe Acrobat Reader' to view it can be downloaded at: |
AN ITALIAN FIRM has conducted a successful referendum among its seasonal workers on new working time arrangements which involve an 'on-call' element. San Benedetto, a company which bottles mineral water offered an indefinite contract to work 5 to 6 months a year and to be on call for the rest of the year at 72 hours notice. They were also offered 120 days training over 3 years in areas like health and safety, languages and workplace rights. Unions say, however, that the new terms are an improvement unlike a similar deal at Zanussi which was rejected.
TRADE UNIONS IN Portugal are gearing up for more confrontation with the government in the coming pay round. Pay rises have been lagging behind inflation of 3.5 % whilst unions feel that workers have not been rewarded for productivity rises, needing an extra 1.6% to catch up. With unemployment down at 3.8% they seem to have a strong hand but are worried about the growth of fixed-term contracts.
IN LONDON THE tighter labour market, with lower unemployment, seems to have led more employers to offer flexitime, home working and other working time arrangements. A new survey of 31 major employers found that 64% of them allowed staff to choose from these.
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