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IRISH INSTITUTE OF PENSIONS MANAGERS SEMINAR

WHAT IS HAPPENING IN EUROPE?. IRISH INSTITUTE OF PENSIONS MANAGERS SEMINAR. ANNE MAHER Chief Executive 19 February 2004 The Pensions Board . AGENDA. EU Pensions Directive Tax Co-Ordination Joint Pensions Report by Commission and Council EFRP Proposal Opportunities for Ireland?

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IRISH INSTITUTE OF PENSIONS MANAGERS SEMINAR

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  1. WHAT IS HAPPENING IN EUROPE? IRISH INSTITUTE OF PENSIONS MANAGERS SEMINAR ANNE MAHER Chief Executive 19 February 2004 The Pensions Board

  2. AGENDA • EU Pensions Directive • Tax Co-Ordination • Joint Pensions Report by Commission and Council • EFRP Proposal • Opportunities for Ireland? • And Other EU Initiatives Affecting Pensions …

  3. EU PENSIONS DIRECTIVE General • Came into force on 23 September 2003 • EU Member states have 2 years to implement i.e. must implement by 23 September 2005 • Key aims • ensure protection for pension plan members • liberalise investment environment for pension plans in EU • remove barriers to cross-border pension plans • Differentiates between national pension plans and cross-border plans • Provides legal framework for Pan-European pension plans

  4. EU PENSIONS DIRECTIVE Implementation Process • Establishment of 2 EU Committees • European Insurance and Occupational Pensions Committee (EIOPC) consists of Finance Dept officials / policy level • Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) consists of supervisors/technical level • Irish national plan for implementation process • Not yet decided • Issues to be agreed include time frame, consultation process, separate legislation or inclusion in other legislation • Aim is to implement in April 2005 through Social Welfare Act 2005 • National decision on content of implementation involves • Agreement on where current Irish legislation needs to be amended to meet Directive • Decisions to be made where member state can decide approach

  5. EU PENSIONS DIRECTIVE Requirements to be met in National Legislation

  6. EU PENSIONS DIRECTIVE Requirements to be met in National Legislation (continued)

  7. EU PENSIONS DIRECTIVE Requirements to be met in National Legislation

  8. EU PENSIONS DIRECTIVE Areas where Ireland needs to decide approach • Application to pension business of insurance companies covered by Life Directives • Exclusion of pension schemes with less than 100 members (de minimis rule) • Whether PRSAs fall inside or outside scope of Directive • Designation of competent authorities for different provisions • Requirement for additional national requirements to be attached to IORPS located in Ireland • Whether to introduce quantitative investment rules

  9. EU PENSIONS DIRECTIVE Regulatory conditions needed for Pan European Pensions • Separate legal entity • Meet information to members, funding, diversification and security of assets, freedom of investment requirements of Directive • Recognition by home country supervisor • Special conditions • authorisation of fund in home country • fully funded at all times • prudential rules: home country of fund • social and labour laws: host country of beneficiaries • Each state may prescribe additional investment constraints relating to its “section” provided such constraints not greater than those imposed on local schemes in that state • In practice may require ring fencing of each section’s assets

  10. TAX CO-ORDINATION • European Court of Justice (ECJ) Cases (e.g. Wielockx, Safir, Danner, Skandia) • EU Communication of 19 April 2001 • The elimination of tax obstacles to the cross-border provision of occupational pensions • Current moves to enforce • Commission referred Denmark to ECJ in July 2003 • Infringement proceedings opened against Italy, Belgium, Spain, France and Portugal in February 2003 • Infringement procedures also opened against UK and Ireland in July 2003

  11. JOINT COMMISSION/COUNCIL REPORT ON ADEQUATE AND SUSTAINABLE PENSIONS • Co-ordination reports from all member states in 2002 • Joint Report published in March 2003 • EU-level analysis of national pension system and ability to face demographic ageing • 11 agreed common EU pension objectives • Objectives relate to • Adequacy • Financial Sustainability • Responding to changing needs

  12. EFRP PROPOSAL • European Federation for Retirement Provision (EFRP) Model for Pan-European pensions • Called EIORP 2005 • Involves • Notional, national sections • Within single indivisible fund

  13. OPPORTUNITIES FOR IRELAND • Home for Pan European Pension Funds? • Opportunities for • Asset Management • Life and Risk Management • Administration • Consultancy • Traditional pension players (UK, NL, Irl) have expertise/experience • Ireland response so far is new fund vehicle known as Common Contractual Fund (CCP) • Pan-European Pension Task Force now looking at opportunities

  14. AND OTHER EU INITIATIVES • Pension portability – consultation with Social Partners • Equality Directives – adopted and in progress • Gender and Supply of Goods and Services Directive – in draft stage

  15. CONCLUSION • After years of talk at EU level things ARE NOW happening • And they ARE GOING to affect Irish pensions • So let us make sure we use the opportunities…

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