|
|
Commissioner Frits Bolkestein said: 'I am pleased that the text on which the Council has agreed preserves the Commission's twin objectives of security and affordability of occupational pensions, without interfering with the organisation and efficiency of Member States' pension systems.'
The text agreed by the Council maintains the core principles of the Commission's proposal:
Scope:
Book reserves schemes where benefits are paid by the employer directly to the employee from company funds continue to be excluded. Nor does the text cover Pay-As-You-Go schemes.
Technical provisions and prudential requirements
The global prudential framework proposed imposes on-going prudential control and requires that funds hold sufficient assets to cover their commitments. The text agreed by the Council recognises the qualitative approach to the calculation of technical provisions proposed by the Commission and would introduce two alternative bases for the definition of the maximum interest rate. It would require the Commission to present every two years a report to the Insurance and Pension Committee on the development of the situation.
Cross-border membership
The proposal establishes a mechanism for co-operation and notification between supervisory authorities of the home Member State (where the pension fund is located) and the host Member State (where the enterprise and the members are located). A large multinational could save up to € 40 million if it could pool all its pension schemes in one fund instead of running different funds in each Member State.
Investment rules
A qualitative approach to investment rules is proposed. Allocation of assets must be prudent and decided in the light of the liabilities entered into by each fund and not in the light of a single set of quantitative rules ('prudent person rule'.) The Council text confirms the prudent person rules as the main principle and introduces some general qualitative principles that explain what is meant by prudence in asset allocation. It confirms the possibility for Member States to have at national level more detailed requirements, within certain limits. It would also allow host Member States (where the sponsoring company and the members are located) to ask home Member States (where the pension fund is located) to apply certain quantitative rules to the assets corresponding to the pension scheme run on a cross-border basis, provided the host Member State applies the same (or stricter) rules to its own domestic funds.