| IORP directive not fully implemented by member states |
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| 15.10.2006 | |
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A number of European states have yet to implement the Pensions Directive known as IORP, which aims to harmonise cross-border work-based pension schemes of multi-national companies. The European Commission's Pensions Unit has told bfinance that Italy, Belgium and Cyprus have yet to fully implement the Directive. France has partially-implemented the Directive and the Commission is still waiting to give its official nod of approval to the UK, according to its Pensions Unit, noting that it is ahead of France in the implementation process. The Commission has also started legal proceedings against Hungary, Poland and the Czech Republic. Italy has been sent to the Court of Justice. Officials in the UK have a different position on the matter. The UK is in full compliance, said an official at the Dept. of Works and Pensions, which has worked on the regulations relating to the Directive. As recent as last July, the UK faced questions relating to Article 16.2c of the Directive. The article requires that an occupational pension scheme establish asset transfer procedures and inform the Pension's Regulator of its status with periodic reports, but those issues have since been resolved, according to Dept. of Works official. All 28 states are obliged to implement the Directive, even if no IORPs exist in a state at the moment. If an institution only manages state pensions (pillar 1) it is not an IORP. The objective of the Directive is to provide a tool for multi-national companies to combine their various pension schemes in different locations so that they can be operated by one fund with cross-border status, resulting in cost savings. A pension scheme can be considered cross-border when the sponsor is located in the home country but its members live and work in another EU state. Delays, delays Under the former system, employees operating across national borders had to establish pension plans in each jurisdiction, resulting in duplication of costs. The cost of such a fragmented approach is estimated at euros 8 billion each year. In June 2003 the European Parliament and the Council adopted the directive on the activities and supervision of institutions for occupational retirement provision (IORP). In October 2004 a first discussion took place on the difficulties encountered by member states in implementing the measures outlined in the Directive in their national legislation. The deadline for implementation was extended. It was first due in September 2005 when a four-month extension was granted. At the time, only 9 out of 25 member states had given notification of implementation. The European Commission may take new legal action against non-compliant member states, said Alan Beverly, deputy head of the insurance and pensions unit at the Internal Market Directorate, during a conference last week at Chatham House. In early July, the UK was referred to the European Court of Justice by the Commission for failing to fully adopt the Directive. V.B |
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