EU Finance Ministers Approve Cross-Border Pensions Directive

by Ulrika Lomas, for LawAndTax-News.com, Brussels

19 May 2003

European Union finance ministers agreed at a meeting last Tuesday to allow pension funds to offer their products throughout the European Union, and to permit workers to take their pensions with them across national borders.

The agreement has been welcomed by some, but came as concern over planned pension reforms reached its height in member states such as Austria and France, both of which last week saw industrial action from public sector workers over the issue.

However, the European Commission has argued that it does not want to undermine state pension schemes, but wants the array of choice available to employees in European countries such as the UK, the Netherlands, and Ireland to be available throughout the Union.

Speaking on Tuesday, Internal Market Commissioner, Frits Bolkestein welcomed the finance ministers' decision to adopt the Directive on the activities and supervision of institutions for occupational retirement provision (IORPs), announcing that:

'Today's Council decision is a major achievement. It concludes more than 10 years of discussions and sometimes difficult negotiations.' He continued:

'The Directive will provide pension funds with a coherent framework to operate within the Internal Market. They will now be able to build on that platform to offer safer and affordable pensions. The Directive will also give European companies and citizens the opportunity to benefit from more efficient pan-European pension funds, and so make an important contribution to tackling the 'pension time bomb'.'

The new law is set to become effective in 2005. However, observers have suggested that cross-border differences over the taxation of premiums and benefits may throw a spanner in the works.

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