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The Directive paves the way for supplementary cross-border pension schemes across the EU. The legislation does not affect existing national pension systems. The Commission estimates that a large multinational could save up to Euro 40 million if it could pool its various schemes into one fund. The Member States can also choose to apply the legislation to life insurance companies.
The compromise amendments seek to strike a balance between different practices across the EU. One amendment preserves the right to receive a payment in the form of a lump sum without any restrictions while a further amendment establishes the right to receive information relating to the transfer of pension rights to another fund in the event of a change of employment. In addition, information should be provided to each individual every year of the situation regarding the value of the pension fund and the current level of individual entitlements.
The legislation is based on home country supervision of pension schemes, respect for national, social and labour legislation, and the prudent person principle. The Directive provides for the home state to lay down specific investment rules ensuring that the assets of the fund are invested in the best interests of the members, that the institution is registered and that it draws up an annual report and accounts. A limit of 70% of assets being invested in shares, negotiable securities treated as shares and corporate bonds is laid down, with the provision for a lower limit for pensions guaranteeing a long-term interest rate benefits.
Taxation questions are being taken up in a separate initiative from the Commission.
Adopted compromise package (German)
Adopted compromise package (English)
Commission press release